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Not on the evidence available here: it has not been established that acquisitions are replacing in-house R&D across the technology industry. Mergers can help firms combine complementary capabilities, but deals involving close or emerging rivals can also weaken independent innovation and competition. Whether that is good news depends on the deal, the market and what the companies would have done without it.
What does “M&A is becoming the new R&D” actually mean?
Research and development builds capabilities inside a company; mergers and acquisitions can bring in capabilities developed elsewhere. The two can be alternatives in a particular transaction, but acquisitions can also add technology, talent or distribution that a buyer uses alongside its own research. Calling M&A “the new R&D” makes a broader claim: that technology firms are increasingly obtaining innovation through deals instead of developing it internally.
The findings summarized here do not establish that industry-wide shift. They do not provide a consistent time series comparing acquisitions with in-house R&D across major technology firms. Nor is “the tech industry” one defined market: competitive conditions and concentration need to be assessed for a particular product or service and geography, not assumed from the label alone.
What does the evidence say about acquisitions and innovation?
| Evidence | Population and period | Reported finding | What it can and cannot show |
|---|---|---|---|
| OECD study, “Acquisitions and their effect on start-up innovation: Stifling or scaling?” (2025) | Firm-level data covering 60 countries, 2001–2021; the reported result concerns acquired start-ups. | Targets were highly innovative before acquisition. Start-up patenting declined after acquisition, with no corresponding increase in acquiror innovation activity in the study’s sample. | This is evidence about the study’s firms and measures, not a universal causal finding about every acquisition. The authors raise concern that some deals may not enhance innovation. |
| European Commission, “The impact of mergers on innovation and markups” (2026) | More than 3,000 mergers reviewed and cleared, with or without conditions, by the Commission from 1990 through 2024. | The Commission’s summary reports average decreases in citation-weighted patent output for merging firms and rivals, alongside increases in average markups and accounting profits. | The summary says this combination is more consistent with increased market power than merger-induced efficiencies. These are average results for the reviewed sample, not a verdict on every merger or technology deal. |
| OECD review, “Theory and evidence on the potential effects of mergers: Concentration in Seed Markets” (2018) | A synthesis that includes a study of 31 deals; the review does not make this a universal sample of technology mergers. | In the summarized study, technological complementarity was associated with increased R&D effort and efficiency; substitutable technologies were associated with reduced R&D effort. | The relationship between what the firms know how to do matters. The review describes reduced effort particularly for direct rivals, but the findings should not be generalized to every deal. |
These studies measure different populations and outcomes, so they should not be combined as though they were one experiment. Patent counts and citation-weighted patent output are indicators of some inventive activity; they do not capture every innovation, product improvement, change in quality or effect on consumers.
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When can a deal help innovation?
A buyer may be able to put complementary technologies, expertise or assets together and develop products or processes that neither firm could deliver as effectively alone. The OECD’s 2018 evidence review reports that complementarity was associated with increased R&D effort and efficiency in the 31-deal study it summarizes. This is a plausible route to innovation gains, not proof that an acquisition will produce them.
Vertical integration raises a different question from buying a direct innovation rival. In a 2019 analysis of technology, media and telecom, the OECD describes coordination and economies of scope as common motivations for vertical mergers. It also warns that vertical deals can harm competition through foreclosure or collusion. A claimed operational benefit therefore needs to be considered alongside the possibility that the merged firm could restrict rivals’ access or coordinate less independently.
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When can an acquisition weaken innovation or competition?
If two firms have substitutable technologies, especially if they compete directly, combining them can reduce the buyer’s incentive to keep multiple research paths alive. The OECD’s 2018 review describes possible channels including employee turnover, a narrower R&D portfolio, a shorter research horizon and less internal funding for R&D. Those are mechanisms reported in the review, not outcomes guaranteed by every deal.
The concern can arise when the target is a start-up with little current revenue but a technology or product that could become a competitive threat. The OECD’s 2020 paper on start-ups, killer acquisitions and merger control says evaluating such cases can require an in-depth counterfactual: what the target was likely to develop, and how it might have competed, if it had remained independent. Purchase price or present-day revenue alone cannot answer that question.
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It also matters what happens after closing. A target’s research might continue as a distinct effort, be integrated into a broader program or be discontinued. The relevant comparison is not simply whether the merged firm files more patents than the target once did; it is whether innovation and competitive pressure are greater or smaller than they plausibly would have been without the transaction.
Is this good or bad news for the tech oligopoly?
For established firms, acquisitions can be a way to add capabilities and reinforce an existing position. For potential entrants and independent innovators, the same deals can remove a route to market or an independent source of competitive pressure. For consumers, the outcome depends on whether integration improves products or reduces meaningful choice, quality or future innovation.
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The European Commission’s 2026 summary is a warning sign for competition in its reviewed-merger sample: average patent-output decreases occurred alongside higher average markups and accounting profits for merging firms and rivals. The Commission summary interprets that pattern as more consistent with increased market power than merger-generated efficiencies. It does not establish that all reviewed deals, all technology acquisitions or every concentrated market produced those effects.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallThe Federal Trade Commission says its Bureau of Competition seeks to prevent mergers likely to reduce competition, including through less innovation, and that investigators examine market dynamics and consumer effects. This describes the agency’s role; it does not mean every transaction is reviewed or blocked. Whether a particular acquisition raises a serious concern depends on its market and facts.
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How to judge a specific technology acquisition
- Define the market. Identify the relevant product or service and geography before describing a market as an oligopoly. There is no single concentration measure here that establishes the structure of the entire technology industry.
- Identify the relationship between the firms. A horizontal deal between direct rivals, a purchase of a potential or nascent competitor, and a vertical or conglomerate deal raise different competitive questions.
- Test complementarity against substitution. Ask whether the firms bring distinct capabilities that can work together or overlap in a way that removes an independent research path or rival.
- Compare innovation before and after the deal. Look beyond the buyer’s total output: consider whether the target’s work continued, whether the buyer’s innovation activity changed and whether rival firms’ activity was affected.
- Check claimed benefits against market effects. Coordination efficiencies should be assessed alongside possible foreclosure, collusion, changes in markups and profits, and effects on entry and rivalry.
- Use more than patents. Patent quantity and citation-weighted output can inform the assessment, but neither is a complete measure of product quality, consumer value or innovation.
What the evidence supports—and what it does not
Acquisitions are one way technology companies can obtain capabilities, and their effects on innovation vary with the relationship between the firms and the way the acquired work is handled. The OECD’s 2025 start-up study and the European Commission’s 2026 review both raise concerns about innovation outcomes in their respective samples; the OECD’s evidence review also describes cases where technological complementarity was associated with higher R&D effort and efficiency.
That is not enough to conclude that M&A has become a replacement for internal R&D across technology firms, or that every acquisition is good or bad for competition. The useful question is narrower: in a defined market, does this deal combine capabilities in a way that improves innovation, or remove an independent source of rivalry whose future contribution matters?
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