Friend or Foe? Ginger Zhe Jin, Mario Leccese, Liad Wagman discussed interactions between top digital platforms such as GAFAM (Google, Apple, Meta, Amazon, Microsoft) and technology ventures startups across capital, labor, innovation, product markets, the potential of collaboration, and how competitive behaviors can shape the innovation ecosystem.
Many top digital platforms, or as known as GAFAM, have made mergers & acquisitions in the market, and it can happen in two common ways: (1) they can invest in startups as a minority equity holder, leaving the founding entrepreneur with majority control over the company. Or (2) Big Tech may acquire the newly founded company and obtain majority control after the startup has accumulated sufficient daily operational cash, made progress in research & development, has on-the-go products, or generated substantial revenue.
According to the study, there can be corporate venture capitalists (CVC) that usually do a minority stake investment, or some investments that may lead to full acquisitions if the startup grows successfully. CVC has surged in the late 1990s, such as Google establishing Google Ventures in 2009 with major investments in Stripe and Uber.
Capital’s Role in Market Dynamics
Corporate Venture Capital (CVC), especially from Big Tech, can boost innovation and growth in startups. CVC is most effective when the corporate investor is in the same industry as the startup, like an IT firm investing in a software startup. However, there's no strong evidence that corporate investors share patents or knowledge to support product development.
Startups gain capital, strategy, and access to markets, while corporates gain insights, new tech, and acquisition options. Big Tech-backed startups often gain a competitive edge, but dependence on CVC might limit disruptive innovation due to acquisition concerns or loss of independence.
Talent Dynamics Between Startups and Big Tech
Many startup founders come from Big Tech. For example, ex-Apple employees have launched over 597 VC-backed startups worth $180B+. Digital platforms like GitHub increase visibility and movement of talent from startups to large firms. GitHub’s 2016 profile update led to a 5.7% rise in transitions to bigger companies.
Big Tech often poaches key startup talent, which can harm startup growth. Non-compete and no-poach deals, like the $415M Apple, Google, Intel, and Adobe case, make it harder for startups to retain talent. As Zuckerberg noted, companies often buy startups for talent, not the business itself.
Innovation in Competitive & Collaborative Environments
Startups innovate disruptively; Big Tech often takes an incremental approach. But acquisitions may reduce startup innovation due to integration challenges. While small startups are agile, they need funding to scale and face risks of losing independence when relying too heavily on Big Tech.
Many startups rely on Big Tech platforms (AWS, Google Cloud, App Store), creating dependency. Platform policy changes can significantly affect visibility and growth. Big Tech’s control over platforms influences which startups succeed.
Big Tech & Startup Relations: Looking Ahead
Interactions between Big Tech and startups shape markets—through funding, talent, R&D, and products. Their evolving relationship will continue to impact digital innovation and competition.
Yet, regulation is catching up. The EU’s Digital Markets Act and the U.S. FTC are enforcing stricter rules to limit Big Tech’s dominance. It remains to be seen if these efforts will balance the playing field.
References:
Ginger Zhe Jin, Others. (2025). "The Role of Digital Platforms in Shaping Tech Venture Innovation". (Link)
Images (Image-1,2) are generated by pixlr.com
Editor: BUILD IT: Research & Publishing Team
