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I have been wondering for a while now, what benefit to the general public do acquisitions actually offer? I'm increasingly convinced that actually making acquis

I have been wondering for a while now, what benefit to the general public do acquisitions actually offer? I'm increasingly convinced that actually making acquisitions illegal is good policy.

encoderer 3y ago
Liquidity to investors which frees capital, demanding that the capital owners find new productive uses of the funds, spurring economic growth. In other words, capitalism.
tomtheelder 3y ago
I'm firmly of the belief that they are negative value in most cases. Consolidation is an economic and social disaster. It's slowly been choking us out for decades. Certainly I think a corporation the size of Amazon making an acquisition is always negative value. I think they should be assumed harmful, and burden of proof should be on the acquirer to demonstrate public good.
- nothead 3y ago
  I agree, but the challenge is defining when a company is big enough to be a problem. Intuitively, Amazon, Google, and MS are all too big for their acquisitions to be considered anything other than anti-consumer. But if you want to regulate it, how do you draw the line? What metrics, what limits, etc.
crote 3y ago
As always, the devil is in the details. Larger companies can get better deals from their suppliers. It can be a nice alternative to bankruptcy for a company which is unprofitable on its own. It would allow for integrations which would be all but impossible with separate companies. Of course in practice it rarely works out like that. Megacorps usually do acquisitions to get rid of competition or to obtain technology. The smaller company is almost always completely gutted within a few years, to the detriment of their original customer base.
- kelnos 3y ago
  That's not how it has to be, though. If we were to legally allow smaller companies to collectively bargain with suppliers to drive prices down, maybe that could work. Or maybe not. But the point I'm making is that we don't have to solve the bad features of our economic system in ways that make things worse, just because that's how it's always been done.
hbosch 3y ago
>what benefit to the general public do acquisitions actually offer? Alexa in your vaccuum, duh.
JohnFen 3y ago
> what benefit to the general public do acquisitions actually offer? If history is any guide, then there is negative public benefit in the vast majority of cases.
zer00eyz 3y ago
Consolidation has benefit. Mao, durring the cultural revolution thought the same thing. That villages could be doing all their own metal work. No one needs a major steel or iron works so break those up and let things be produced locally. It backfired spectacularly. There are things that can only be done at scale (steel). There are things that you can let have more linear growth as you scale (accounting), IT. You get very interesting things when companies get very large. Bell labs, gave us unix (that ATT gave away cause it was a monopoly). Xerox gave us the modern GUI. ML foundations emerged out of google. The funding for 23 and me came from google founders and helped push squencing (capital into that market). Innovation tends to come from taking smart people throwing piles of money at them, and letting them do their thing. This was the realm of the aristocracy, then the university, then the government and now it's in the hands of private business. Everyone may hate on musk but rockets that land is progress that got made because he got stupidly rich and beat the incumbants. If you want something different, you can have that. You can start your own company, run it in the style of Mondragon (cool corp go check them out) and claw your way to the top.
- kelnos 3y ago
  We can also accept that slower, more gradual levels of invention and innovation is the price of not setting ourselves up for avoiding sliding into a corporatist techno-dystopia.
  - chucke1992 3y ago
    By "slower, more gradual levels" do you mean falling behind and taken over by some other foreign company? History showed time and time again (in every sphere) that more aggressive, more hungry competitor (company, person) will win in the end. Europe is the notorious "old man" of the world.
    - BeFlatXIII 3y ago
      > Europe is the notorious "old man" of the world. That's because they bombed themselves to smithereens twice within 30 years about a century ago.
michaelt 3y ago
A country could benefit from having behemoth monopolist companies, as long as they're pulling plenty of money from abroad into the country. If Facebook and Google have a duopoly on online ads, and businesses in India and Saudi Arabia and Russia and Europe who want to advertise online are sending money to America, and the companies are making lots of their American employees rich - that sounds like a good thing for America?
- madeofpalk 3y ago
  Do you think there might be negative effects for other american businesses if two companies control digital advertising and collude with each other to limit competition? https://www.justice.gov/opa/pr/justice-department-sues-google-monopolizing-digital-advertising-technologies https://www.justice.gov/opa/pr/justice-department-sues-googl...
  - michaelt 3y ago
    Of course there'll be negative effects for other American businesses. But so long as the collusion has a greater negative effect for foreign businesses, and most of the money extracted from American businesses stays in America - that's more money for America. Hypothetically. At least, this is what I assume American legislators are thinking when they ignore competition issues.
    - deleted 3y ago
      [deleted]
    - nothead 3y ago
      That's not how the system works, though. Digital ads in foreign markets are foreign income, which means that there are not domestic benefits. When Google sells an ad in Saudi Arabia, that ad revenue goes to Google's local company and only benefits Google. Even though they're an American company, that revenue is not taxed or repatriated in any way. There's a current SCOTUS case about this exact question and it looks likely that it will be decided in favor of these companies to repatriate their revenue without paying a single penny in taxes. In other words: they racked up hundreds of billions in revenue and just held it overseas until they can claw it back without paying their fair share.

I have been wondering for a while now, what benefit to the general public do acquisitions actually offer? I'm increasingly convinced that actually making acquisitions illegal is good policy.

encoderer 3y ago

Liquidity to investors which frees capital, demanding that the capital owners find new productive uses of the funds, spurring economic growth. In other words, capitalism.

tomtheelder 3y ago

I'm firmly of the belief that they are negative value in most cases. Consolidation is an economic and social disaster. It's slowly been choking us out for decades. Certainly I think a corporation the size of Amazon making an acquisition is always negative value. I think they should be assumed harmful, and burden of proof should be on the acquirer to demonstrate public good.

nothead 3y ago
I agree, but the challenge is defining when a company is big enough to be a problem. Intuitively, Amazon, Google, and MS are all too big for their acquisitions to be considered anything other than anti-consumer. But if you want to regulate it, how do you draw the line? What metrics, what limits, etc.

crote 3y ago

As always, the devil is in the details. Larger companies can get better deals from their suppliers. It can be a nice alternative to bankruptcy for a company which is unprofitable on its own. It would allow for integrations which would be all but impossible with separate companies. Of course in practice it rarely works out like that. Megacorps usually do acquisitions to get rid of competition or to obtain technology. The smaller company is almost always completely gutted within a few years, to the detriment of their original customer base.

kelnos 3y ago
That's not how it has to be, though. If we were to legally allow smaller companies to collectively bargain with suppliers to drive prices down, maybe that could work. Or maybe not. But the point I'm making is that we don't have to solve the bad features of our economic system in ways that make things worse, just because that's how it's always been done.

hbosch 3y ago

>what benefit to the general public do acquisitions actually offer? Alexa in your vaccuum, duh.

JohnFen 3y ago

> what benefit to the general public do acquisitions actually offer? If history is any guide, then there is negative public benefit in the vast majority of cases.

zer00eyz 3y ago

Consolidation has benefit. Mao, durring the cultural revolution thought the same thing. That villages could be doing all their own metal work. No one needs a major steel or iron works so break those up and let things be produced locally. It backfired spectacularly. There are things that can only be done at scale (steel). There are things that you can let have more linear growth as you scale (accounting), IT. You get very interesting things when companies get very large. Bell labs, gave us unix (that ATT gave away cause it was a monopoly). Xerox gave us the modern GUI. ML foundations emerged out of google. The funding for 23 and me came from google founders and helped push squencing (capital into that market). Innovation tends to come from taking smart people throwing piles of money at them, and letting them do their thing. This was the realm of the aristocracy, then the university, then the government and now it's in the hands of private business. Everyone may hate on musk but rockets that land is progress that got made because he got stupidly rich and beat the incumbants. If you want something different, you can have that. You can start your own company, run it in the style of Mondragon (cool corp go check them out) and claw your way to the top.

kelnos 3y ago
We can also accept that slower, more gradual levels of invention and innovation is the price of not setting ourselves up for avoiding sliding into a corporatist techno-dystopia.
- chucke1992 3y ago
  By "slower, more gradual levels" do you mean falling behind and taken over by some other foreign company? History showed time and time again (in every sphere) that more aggressive, more hungry competitor (company, person) will win in the end. Europe is the notorious "old man" of the world.
  - BeFlatXIII 3y ago
    > Europe is the notorious "old man" of the world. That's because they bombed themselves to smithereens twice within 30 years about a century ago.

michaelt 3y ago

A country could benefit from having behemoth monopolist companies, as long as they're pulling plenty of money from abroad into the country. If Facebook and Google have a duopoly on online ads, and businesses in India and Saudi Arabia and Russia and Europe who want to advertise online are sending money to America, and the companies are making lots of their American employees rich - that sounds like a good thing for America?

madeofpalk 3y ago
Do you think there might be negative effects for other american businesses if two companies control digital advertising and collude with each other to limit competition? https://www.justice.gov/opa/pr/justice-department-sues-google-monopolizing-digital-advertising-technologies https://www.justice.gov/opa/pr/justice-department-sues-googl...
- michaelt 3y ago
  Of course there'll be negative effects for other American businesses. But so long as the collusion has a greater negative effect for foreign businesses, and most of the money extracted from American businesses stays in America - that's more money for America. Hypothetically. At least, this is what I assume American legislators are thinking when they ignore competition issues.
  - deleted 3y ago
    [deleted]
  - nothead 3y ago
    That's not how the system works, though. Digital ads in foreign markets are foreign income, which means that there are not domestic benefits. When Google sells an ad in Saudi Arabia, that ad revenue goes to Google's local company and only benefits Google. Even though they're an American company, that revenue is not taxed or repatriated in any way. There's a current SCOTUS case about this exact question and it looks likely that it will be decided in favor of these companies to repatriate their revenue without paying a single penny in taxes. In other words: they racked up hundreds of billions in revenue and just held it overseas until they can claw it back without paying their fair share.