Why Tech Mergers May End Up Hurting the Web
Suddenly, it's mating season in the tech sector. Xerox is paying $6.4 billion for a piece of the cloud, Adobe is hooking up with Omniture and Intuit with Mint, and that may just be the start. As Om pointed out, this is good news for startups …
Context & Ripple Effects
GigaOM called the turn in mid-September with its case that returning tech M&A is good news for startups; two weeks later the wave has names attached — Adobe's acquisition of Omniture, Intuit's purchase of Mint, and Xerox's $6.4 billion move into the cloud. This piece supplies the counterweight to that optimism: every exit is also an absorption, moving an independent web service inside a proprietary suite.
The tension isn't new to this coverage — the contrarian take on a possible Microsoft/Yahoo merger argued back in February 2008 that consolidation might actually strengthen the web. Today's round of smaller capability tuck-ins raises the opposite concern: not two giants colliding, but a steady drain of neutral, best-of-breed services into closed stacks.
First-order effects
- Startups regain a working exit market: Adobe, Intuit, and Xerox are buying products and teams outright, restoring acquisition as the default path for venture-backed companies after the 2008–09 deal drought.
- Omniture's and Mint's users become suite customers overnight — their standalone services are now features inside Adobe and Intuit platforms rather than independent products.
Second-order effects
- Rival web-analytics and personal-finance vendors face a forced choice: sell themselves to a suite owner or compete against bundled pricing and distribution they cannot match alone.
- Adjacent acquirers reading the same signals come under pressure to make their own capability buys, extending the M&A wave past these first movers and bidding up prices for the remaining independents.
Third-order effects
- If capability-buying holds as the pattern, the web's strongest independent services steadily migrate into proprietary suites, tilting the industry from interlinked open services toward vertically owned stacks — exactly the outcome the analyst here flags as harmful to the open web.
- An exit market dominated by strategic acquirers reshapes what gets founded: startups optimize to become acquisition targets rather than durable independents, concentrating the web's capabilities in fewer corporate hands over time.
The trend: Post-crisis tech consolidation is converting independent web services into features of large proprietary platforms, with strategic acquirers setting both the exit terms and the openness of the web itself.