April 1, 2024
Business Insider recently published an article featuring Florian Ederer, Allen and Kelli Questrom Professor in Markets, Public Policy & Law, discussing the relationship between startups and tech giants.
Rather than being replaced, startups are often acquired by tech giants, raising concerns about antitrust behavior. The process of co-opting disruption involves providing support to startups while ultimately protecting the interests of the tech giants. This strategy is subtle, making it more effective at eliminating meaningful innovation.
“It’s much, much harder to prove that a company got taken over and its focus got slightly shifted to not competing quite so intensely,” Ederer adds.
Experts argue that regulators should strengthen rules against executives sitting on the boards of their competitors and increase transparency around financial ties between tech giants and startups.