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Google, Facebook Buying Up Companies

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Google, Facebook Buying Up Companies

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BERLIN, GERMANY - SEPTEMBER 26: A DJ plays music on September 26, 2012 at the official opening party of the Google offices in Berlin, Germany. Although the American company holds 95% of the German search engine market share and already has offices in Hamburg and Munich, its new offices on the prestigious Unter den Linden avenue are its first in the German capital. The Internet giant has been met with opposition in the country recently by the former president's wife, who has sued it based on search results for her name that she considers derogative. The European Commission has planned new data privacy regulations in a country where many residents opted in to have their homes pixeled out when the company introduced its Street View technology. (Photo by Adam Berry/Getty Images)

Google is known for buying nearly 200 private companies both in the Bay Area and the world since 2010, but Facebook, Twitter and Cisco Systems all have been pouring out millions to acquire businesses, too. 

Google, Facebook, Twitter and Cisco were in the nation's top five buyers of privately held tech companies, according to the San Jose Mercury News. Mostly that means startups, which they're acquiring for technology, staffing or patents. It's easier to buy than it is to create, especially if a company already has millions at its disposal.

"It just allows technology to evolve more rapidly," Chad Seiler, an acquisition expert at consulting firm KPMG, told the Mercury News. "It's essentially a supplement to R & D." 
 
Privco, a New York-based research firm, released the data on the Bay Area companies, and Douglas Weitman, an analyst, spoke about a fear that tech firms have of losing their edge. "It's an industry particularly affected by a heightened anxiety of falling behind, of obsolescence," he said.
 
According to its regulatory filings, Google acquired 196 companies for $18.54 billion from 2010 through June 2013, according the the Mercury News. The largest acquisition was the $12.4 billion Motorola Mobility. One of the its recent purchases was the $1.3 billion mapping app Waze.
 
Acquisitions supposedly help out consumers most by giving them the most up-to-date products available, but perhaps its startup founders who most benefit -- usually going from struggling engineers to millionaires overnight, and a guaranteed job at an established tech company.
 
"To work in a big company is less stress than to fight for your life," said Max Ventilla, a founder of startup Aardvark, which Google acquired for $50 million.
 
Facebook's pace has been slower, but it has bought almost 40 companies since 2005, including its most famous purchase so far, Instagram. Apple, too, has bought nearly 50 companies since 1988 which gave the tech company needed innovation for its computers, smartphones and tablets. Cisco Systems has bought 167 companies since 1993.
 
While many think it's practical to buy companies who innovate rather than create innovation, one should wonder if that means that large companies are too bloated to create anything new or interesting without relying on outside acquisitions. Has recruiting for these companies become so poor that it can't rely on its hired talent? It seems so.

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