Diversification in digital platforms: a study for Google and Facebook based on the resource-based M&A approach

Abstract

This paper seeks to understand the logic of diversification followed by the two main global digital platforms - Google and Facebook - in their M&A operations, and whether they follow any of the categories provided in the literature: horizontal, vertical, concentric or conglomerate. To this end, a recent literature review on digital platform markets is presented, considering both theory and the experience of international regulators. The theoretical framework of resource-based diversification is then addressed, as well as the specific cases of Google/Alphabet and Facebook/Meta, using data from crunchbase. It was concluded that both companies had a diversification trajectory in line with their technological capabilities, initially with vertical and horizontal diversifications to reach new markets, with a focus on expanding into Industry 4.0 technologies.