Data Scale, Data Scope and PlatformEnterprise Performance: Insights fromDigital Platform M&As

Liu Yubin1, Zhang Guijuan2, Xu Honghai*3

1 Tianjin University of Finance & Economics, Tianjin, China

2 Anhui University of Finance & Economics, Bengbu, China

3 Nanjing University of Finance & Economics, Nanjing, China

Abstract: Data is a key asset for digital platforms, and mergers and acquisitions (M&As)are an important way for platform enterprises to acquire it. The types of data obtained fromintra-industry and cross-sector M&As differ, as does the extent to which they interact withinor between platforms. The impact of such data on corporate market performance is animportant question to consider when selecting strategies for digital platform M&As. Basedon our research on advertising-driven platforms, we developed a two-stage Hotelling gamemodel for comparing the market performance effects of intra-industry M&As and crosssectorM&As for digital platforms. We carried out an empirical test using relevant datafrom advertising-driven digital platforms between 2009 and 2021, as well as a case studyon Baidu’s M&A activities. Our research discovered that intra-industry M&As driven by“data economies of scale” and cross-sector M&As driven by “data economies of scope”are both beneficial to the market performance of platform enterprises. Intra-industry M&Ashave a more significant positive effect on the market performance of platform enterprisesbecause the same types of data are easier to integrate and develop the “network effect ofdata scale”. From a data factor perspective, this paper reveals the inherent economic logicby which different types of M&As influence the market performance of digital platforms, aswell as policymaking recommendations for all digital platforms to select M&A strategiesbased on data scale, data scope, and the network effect of data.

Keywords: Digital platforms, intra-industry M&A, cross-sector M&A, data economies of

JEL Classification Codes: L25, L86, M21

DOI: 10.19602/j.chinaeconomist.2024.09.05