Classroom Companion: Business
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Introduction to Digital Economics
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14.4
Conclusions Mergers and acquisitions are common in the digital economy in which the frequent motives have been to get rid of competitors, to get access to new technologies, to buy assets such as patents, to increase market shares, and to expand into new mar- kets, or in short, to get bigger, more powerful, and richer. Several of the big corpo- rations are huge conglomerates consisting of subsidiaries operating in different technological branches. One reason being that the rate of innovations after 1995, when the World Wide Web was commercialized, has been enormous. Mobile apps are examples of this innovativeness. Currently, there are almost three million apps available, and new apps are added to the app store at a rapid rate, while old once that are no longer useful disappear. All the big corporations in the digital economy have either become de facto monopolies or are market leaders in at least one of their markets. They have become so, because there are strong network externalities in these markets that eventually work in favor of the winner and keeps the competitors small or push them out of the market. This is unavoidable organic growth. In addition, these companies grow more by buying or merging with other companies, creating com- mercial giants with a monopolistic core business surrounded by a large number of subsidiaries. As has been demonstrated in previous chapters, the company may not even earn money from its core business but only from its subsidiaries. Facebook is a good example. This state of affairs is hard to regulate by the authorities to avoid market failure and concentration of power. Chapter 14 · Mergers and Acquisitions 215 14 > Exercise Google has made more than 240 acquisitions since 2001. A selection of those include Android, YouTube, DoubleClick, GrandCentral, Motorola, and Waze. Discuss how these acquisitions have allowed for new or strengthened existing business domains of Google (you may use Wikipedia for a description of Google and the acquisitions). Download 5.51 Mb. Do'stlaringiz bilan baham: 
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