Mergers and acquisitions (M&A) activity in the technology sector is the subject of an intense debate which has spurred enforcement, regulatory, and legislative activity. Enforcers have brought action against past mergers, such as the acquisitions of Instagram and WhatsApp by Facebook,1 and legislators are contemplating significant changes to antitrust laws often aimed at large tech companies.2 For example, the Platform Competition and Opportunity Act, which is currently being considered by the US House of Representatives, would prohibit certain digital platforms from acquiring other firms unless they are able to demonstrate that the acquisition will not lessen current or potential competition, nor enhance the platforms’ market power.3
Despite the exceptional focus on reigning in M&A activity in the technology sector, the empirical evidence is incomplete at best. This matters because an outsized regulatory focus on the technology sector could be misplaced. Recent empirical studies include a report by the antitrust subcommittee of the House of Representatives (Congress Report),4 a study of past merger activity of large tech firms by the Federal Trade Commission (FTC Study),5 academic papers,6 and articles in antitrust trade publications.7 These studies share a common limitation: a narrow focus on certain firms in the technology sector. As such, they fail to provide a historical perspective, and more importantly, they fail to put the tech industry in the broader context of the U.S. and global economy.8
To remedy this blind spot, Andrea Asoni and Grace Luo study M&A activity in the tech sector and other sectors of the US economy over time and across countries. Our results suggest that the US tech industry is not disproportionately prone to consolidation relative to its size, as well as relative to other important sectors of the US economy. Furthermore, we find that while the M&A activity in the technology sector has been historically higher in the US than other countries, the rest of the world has been rapidly converging towards a level comparable to that of the US. In addition, contrary to a concern shared by many legislators, enforcers, and antitrust practitioners, we do not find that M&As in the tech sector are driven by large firms or prolific acquirers.9 While the debate around the necessity of antitrust reforms, more stringent enforcement, and regulatory intervention specifically tailored to the technology sector is complex, multifaceted, and far from settled, our findings suggest caution against an over-simplified view of the prevalence of M&A activity in the technology sector and the role of large firms and prolific buyers.