“Killer” Acquisitions in the Digital Economy
REMEMBER STACKER? ANOTHER LOOK AT “KILLER” ACQUISITIONS IN THE DIGITAL ECONOMY BY BENOIT D’UDEKEM, DIVYA MATHUR & MARC VAN AUDENRODE1 1 Vice President, Analysis Group, Brussels, Belgium, Vice President, Analysis Group, Chicago, United States, and Managing Principal, Analysis Group, Brussels, Belgium. CPI ANTITRUST CHRONICLE I. INTRODUCTION MAY 2020 In 1990, a small software corporation, Stac Electronics, released a drive compression software called Stacker that doubled PC hard drives’ volume. At that time, hard drives had limited capacity and were expensive. Unsur- “Killer Acquisitions,” Big Tech, and prisingly, the drive compression software was hugely successful. In 1993, Microsoft released version 6.0 of its flagship operating system, MS-DOS, Section 2: A Solution in Search of a which included its own compression software. This led to a long legal bat- Problem tle between Microsoft and Stac Electronics, at the end of which Microsoft By Kristen C. Limarzi & Harry R. S. Phillips had to remove its drive compression feature from MS-DOS and compen- sate Stac Electronics. “How Tech Rolls”: Potential Competition and “Reverse” Killer Acquisitions Today, perhaps Microsoft would simply buy Stac Electronics and By Cristina Caffarra, Gregory S. Crawford spare itself the legal headache. & Tommaso Valletti Would that be a bad outcome? Maybe not. Economists have long The No Kill Zone: The Other Side of debated the relationship between incumbency, market power and innova- Pharma Acquisitions tion, with no unambiguous answer to date. Incumbents and monopolists By Jacqueline Grise, David Burns may have less incentive to innovate2 (the so-called “replacement effect”), & Elizabeth Giordano but may also be better at innovating3 (the so-called “efficiency effect”).
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