①When Microsoft bought task management app Wunderlist and mobile calendar Sunrise in 2015, it picked two newcomers that were attracting considerable buzz in Silicon Valley. ②Microsoft’s own Office dominates the market for “productivity” software, but the start-ups represented a new wave of technology designed from the ground up for the smartphone world.
①Both apps, however, were later scrapped, after Microsoft said it had used their best features in its own products.②Their teams of engineers stayed on, making them two of the many “acqui-hires” that the biggest companies have used to feed their great hunger for tech talent.
①To Microsoft’s critics, the fates of Wunderlist and Sunrise are examples of a remorseless drive by Big Tech to chew up any innovative companies that lie in their path. ②“They bought the seedlings and closed them down,” complained Paul Arnold, a partner at San Francisco-based Switch Ventures, putting an end to businesses that might one day turn into competitors. ③Microsoft declined to comment.
①Like other start-up investors, Mr. Arnold’s own business often depends on selling start-ups to larger tech companies, though he admits to mixed feelings about the result: “②I think these things are good for me, if I put my selfish hat on. ③But are they good for the American economy?④ I don't know.”
①The US Federal Trade Commission says it wants to find the answer to that question. ②This week, it asked the five most valuable US tech companies for information about their many small acquisitions over the past decade. ③Although only a research project at this stage, the request has raised the prospect of regulators wading into early-stage tech markets that until now have been beyond their reach.
①Given their combined market value of more than $5.5 trillion, rifling through such small deals—many of them much less prominent than Wunderlist and Sunrise—might seem beside the point. ②Between them, the five biggest tech companies have spent an average of only $3.4 billion a year on sub-$1 billion acquisitions over the past five years—a drop in the ocean compared with their massive financial reserves, and the more than $130 billion of venture capital that was invested in the US last year.
①However, critics say the big companies use such deals to buy their most threatening potential competitors before their businesses have a chance to gain momentum, in some cases as part of a “buy and kill” tactic to simply close them down.
