Earlier this month, Google announced a 7.7% stake in Reliance’s Jio Platforms, weeks after a similar deal by Facebook. Given that both these tech giants have a history of buying a stake in other firms, the phenomenon is not new.
However, such big buyouts may not really help the digital platforms sector: as a new study suggests, they tend to create a “kill-zone” that drives out start-ups’ incentive to innovate.
The study, whose authors include former Reserve Bank of India governor Raghuram Rajan, was published as a working paper by the US National Bureau of Economic Research.
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