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Gathering round Big Tech: how the market for acquisitions concentrates the digital sector

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  • Ioramashvili, Carolin
  • Feldman, Maryann
  • Guy, Frederick
  • Iammarino, Simona

Abstract

Small businesses within the digital sector are spread across the USA. However, a significant number of promising small businesses concentrate in major technology hubs, either initially or through relocation. This phenomenon can be attributed to the influential role played by localized markets for financing and acquisition, which is, in turn, driven by the dominant market positions held by major digital platforms. Our research demonstrates a clear pattern of localized acquisition markets, particularly in sectors frequently targeted by the seven largest American digital giants—Amazon, Alphabet (Google), Apple, Microsoft, Meta (Facebook), Oracle, and Adobe, collectively known as ‘Big Tech’. This localization trend has become more pronounced between 2000 and 2020. Our analysis indicates that the gravitational pull of these acquisition markets poses challenges to local initiatives aimed at fostering digital businesses. These efforts would be more successful if measures were taken to limit the market influence of digital platforms.

Suggested Citation

  • Ioramashvili, Carolin & Feldman, Maryann & Guy, Frederick & Iammarino, Simona, 2024. "Gathering round Big Tech: how the market for acquisitions concentrates the digital sector," LSE Research Online Documents on Economics 123670, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:123670
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    More about this item

    Keywords

    Big Tech; digital start-ups; acquisitions; monopoly; regional inequality;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • F00 - International Economics - - General - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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