“The defining technology merger of 1998 was Microsoft’s purchase of Compu-Global-Hyper-Mega-Net, Homer Simpson’s internet start-up, for an undisclosed price. Though Bill Gates conceded he had no idea what the company did, he would rather it didn’t. And, on agreement being reached, Microsoft goons immediately broke all Homer’s stuff.
This is sort of funny because it’s sort of true. Between 2015 and 2016 the big-five US tech companies (Microsoft, Apple, Amazon, Google and Facebook) bought 175 companies and shut down most of them, a 2020 paper from Axel Gautier and Joe Lamesch found.
Nevertheless, the so-called killer merger — a company taking out a rival solely to extinguish its threat — seems a lot rarer in tech than in industries such as pharma. Of all 175 acquisitions, Gautier and Lamesch classify just one, Facebook’s 2016 purchase of selfie-filter maker Masquerade, as a “killer” deal. The big five mostly stripped their acquisitions for parts, and used those parts to reinforce their existing products. M&A has been a substitute for R&D.”
