Digital Innovation, Entrepreneurship, and New Business Models
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Paper Number
1876
Paper Type
Completed
Description
The prominence and perceived power of tech giants—Amazon, Apple, Facebook, and Google— have raised antitrust concerns in stifling new startup entries, particularly the so-called kill zone effect. We provide evidence showing that such an allegation is real as the entrants of tech giants’ product spaces have a significantly lower (higher) likelihood of receiving second round VC financing (being inactive or defunct) relative to benchmark entrants in recent years. However, when examine the source of kill-zone effect, we rule out network effect as a factor explaining such a kill-zone effect. It implies that the anti-competitive activities engaged by tech giants are the likely culprits.
Recommended Citation
Song, Weiling and Pan, Yang, "Tech Giants and New Entry Threats" (2021). ICIS 2021 Proceedings. 11.
https://aisel.aisnet.org/icis2021/dig_innov/dig_innov/11
Tech Giants and New Entry Threats
The prominence and perceived power of tech giants—Amazon, Apple, Facebook, and Google— have raised antitrust concerns in stifling new startup entries, particularly the so-called kill zone effect. We provide evidence showing that such an allegation is real as the entrants of tech giants’ product spaces have a significantly lower (higher) likelihood of receiving second round VC financing (being inactive or defunct) relative to benchmark entrants in recent years. However, when examine the source of kill-zone effect, we rule out network effect as a factor explaining such a kill-zone effect. It implies that the anti-competitive activities engaged by tech giants are the likely culprits.
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