M&A as Capability Building
Traditional antitrust focuses on market shares, but many Big Tech acquisitions have technological motivations that cut across distinct product markets. We advance a patent-based framework whereby Big Tech’s acquisitions aim to consolidate horizontally or diversify vertically technological capabilities through buying proven or nascent technologies — proxied by predicted patent citation potential. Linking 995 Big Tech M&A transactions (2000–2022), of which 223 yielded patents, to 114,004 patent families, we find that diversification dominates: four of five Big Tech firms acquire predominantly outside their core technology areas, consistent with ecosystem expansion. Firms vary in favouring proven vs. nascent technologies.
