Do Big Tech acquisitions of start-ups spur or deter venture capital? Evidence from China

This study analyzes 159,299 venture capital transactions and 144 start-up acquisitions by Baidu, Alibaba, and Tencent between 2012 and 2021. Using a double machine learning framework, we examine the impact of Big Tech acquisitions on venture capital activity. The results show that such acquisitions significantly stimulate venture capital. Further analysis indicates that they send positive signals to the media and market, strengthening investor confidence. These findings suggest that antitrust policy should differentiate between anti-competitive and innovation-enhancing acquisitions and harness the signalling effect to reduce information asymmetry and encourage investment.