Slack Acquisitions: When Startup Innovation Gets Lost After the Deal

In this piece for the CLS Blue Sky Blog, author Marco Corradi explains that debates over Big Tech mergers often focus on “killer acquisitions,” but a less visible threat is what he calls “slack acquisitions.” Rather than intentionally eliminating a future competitor, these deals result in promising startup technologies being absorbed into larger firms where innovation slows, stalls, or is never fully developed, despite the absence of anticompetitive intent.

Corradi argues that evidence increasingly suggests acquisitions do not always deliver the innovation benefits they promise. Drawing on recent OECD research, he notes that startups frequently experience declines in patenting and research activity after being acquired, while the acquiring firms often fail to compensate with greater innovation of their own. The result is not the destruction of knowledge, but its underuse within larger organizations whose priorities or internal structures may hinder further development.

The author contends that this presents a challenge for competition law, which is generally designed to identify price effects, market concentration, and overt exclusionary conduct rather than subtle losses in innovative capacity. In digital markets, where startups generate modular technologies and new avenues for experimentation, allowing promising ideas to stagnate after acquisition can reduce long-term competition even when the transaction appears commercially successful.

Corradi argues that merger review should move beyond examining market shares and the acquirer’s intent to assess whether the buyer has a credible strategy to integrate, invest in, and continue developing acquired technologies. Greater scrutiny of post-acquisition innovation outcomes, particularly in digital markets, would better protect the dynamic competition that startups contribute and help ensure that valuable innovation is not quietly lost through neglect rather than design…

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