In the industry that is information technology it’s not uncommon at all to see large and established companies such as Microsoft and Google swallow up startups that they see as a potential asset to their overall operations. This “if you can’t beat them, but them” approach is not only beneficial for the buyers who gain what are often times already established products and services, but also gives the purchased startups the ability to leech onto the resource of the larger entity in order to expand at levels they wouldn’t have previously been able to fathom before without big wallets backing them up.
But these acquisitions don’t always stop with small buys. Sometimes it makes sense for businesses to acquire large companies that they see as competition or a threat to their business. Recently Microsoft dropped $8.5 billion to buy VOIP service Skype, and Google earned a bit of publicity earlier this year when they offered $6 billion to purchase Groupon only to be turned down.
When it comes to online shopping, one of the most well-known online retailers is Amazon.com, Inc. Amazon, a company that started as an online store in 1994, has grown to become a huge multi-million dollar corporation that dominates the Internet. One of the things that really intrigues me about Amazon is the fact that they are able to not only make money by selling products as a traditional online store, but are also able to make money as the store back-end for sites that use Amazon for their storefronts. Moreover, services such as Amazon Web Services show that the company is able to “shoehorn” themselves into other sub-industries in order to become a “big player.” But how could Amazon take this market dominance to the next step and cut their costs while doing so?
To answer this question, we have to look at the business practices of eBay, Inc. and evaluate their wise business ventures in the past. You see, in October of 2002 eBay bought PayPal, an online payment processor. The implementation of PayPal into eBay has allowed people to buy and sell goods without the level of hassle seen before.