Killer Acquisitions - Killing Innovation? Navigating the Disruptive Tech World's Most Lethal Deals

Abstract

Understanding killer acquisitions is of critical importance in anticipating a future where dominant tech firms build even greater market power stifling innovation, attenuating competition, and potentially negatively impacting society. While evidence on the prevalence of killer acquisitions in the pharmaceutical sector has been documented, evidence in the technology sector is scarce. In response, this work uses a mixed-method research design to examine the frequency, motivation, and role of killer acquisitions within disruptive technology firms. Through case study analysis on NATU (Netflix, Airbnb, Tesla, and Uber) firms we demonstrate that killer acquisitions are carried out by disruptive tech firms when aligned with four characteristics: 1) investments are solely focused on adjacent or transformational activities, 2) do not follow cross-border geographical expansion, 3) have an undisclosed price, and 4) both firms operate in high-tech segments similar to the incumbent. Given these findings, we then present a framework, combining a Killer Acquisition and Hostility Spectrum, for better understanding of more nuanced acquisition strategies, associated motivations, and potential outcomes in the technology sector. Theoretical, managerial and policy implications are then discussed. Theoretically, the findings contribute to existing literature by addressing research gaps and providing a more nuanced approach to an otherwise binary framework, while the work provides managerial understanding of future competitive dynamics, and importantly aides policymakers with insight on potentially anti-competitive behaviour with negative societal impact.