Anticompetitive Effects of Acquihires: Labor and Product Markets

Acquihires and “reverse acquihires” allow large technology firms to secure key employees and intellectual property, but they also raise important labor- and product-market concerns. A central puzzle is why acquirers transfer large payments to startup investors rather than simply offering higher wages to workers. We show that such payments can increase monopsony power by eliminating the workers’ main alternative employer, making it cheaper to buy out investors than to compete for talent dir