The number of acquisitions by Amazon, Apple, Alphabet\u0027s Google, Facebook and Microsoft came at the fastest pace through June since 2015
Through June 30, the five companies announced 27 deals, according to Bloomberg data, up 29 per cent from the same period last year, when they did 21 deals.
An even bigger worry is that the tech companies are potentially choking off competition by acquiring firms that, while small, could one day emerge as robust rivals. After all, the tech giants were all startups once. Amazon said its deal volume as a percentage of revenue is low compared to that of many other companies and noted that it’s primarily growing the business internally, rather than through acquisitions. Spokespeople for the other companies declined to comment.
Big Tech is even buying amid a world economy ravaged by the coronavirus pandemic. While global economic output is expected to shrink by 4.9 per cent this year and bankruptcies and job losses are tearing through industries, tech companies are enjoying surging traffic and sales. Collectively, the five companies are sitting on more than US$450 billion in cash and short-term investments, positioning them to snap up targets that may be battered by the recession.
It’s a similar story in the European Union, where most of the tech giants’ deals fall under the revenue threshold for mandatory review by the European competition authority. The EU has never reviewed an Amazon deal, and it didn’t review Facebook’s 2012 acquisition of Instagram, though it did approve the 2014 WhatsApp takeover.
The takeovers could be cast in a more benign light. The tech companies say that acquisitions are a way to broaden their reach by acquiring talent, developing new products and entering new markets. They also create incentives to build startups by providing founders a way to cash out of their companies.
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