In 2020, so far, one of the most interesting trends in the marketplace is the increase in mergers and acquisitions in the tech sector. During the third quarter of 2020 alone, over a dozen deals valued at $10 billion were announced. In fact, this has been the biggest volume of deal-making in the tech sector since 2015. This is a particularly interesting trend given the wider economic picture. 


The COVID-19 pandemic has changed the way many businesses work. Restrictions on public gatherings and mask mandates have made it difficult for retail, restaurants, and many other sectors. However, the tech world has mostly been able to work from home. Companies like Zoom have seen a sharp increase in profits. Amazon is booming due to people staying home rather than going to the store. And services like Netflix had a captive audience for months.


During this time, big tech companies have been in a consolidation phase. Companies like Facebook have been snapping up cheap office real estate in cities like New York. Alphabet, Amazon, Microsoft, and Apple are also snapping up smaller companies that serve their interests. Most of these are a part of the technology industry, too. For example, in June, Amazon purchased Zoox, a self-driving car company. 


Although Amazon intends for Zoox to retain its own identity, it’s easy to see why a company that runs on delivery wants to partner with a company specializing in autonomous delivery. Big tech companies are looking for ways to cover all the bases. They want to be able to turn a profit at every step of the transactions that their customers are making. An economic downturn is a perfect time for them to make these moves. In effect, they’re able to get something of a discount on many of these purchases, and they have plenty of profits to burn.


This is a different approach from what tech companies did in earlier recessions, like 2008 and 2001. At that time, they played it much safer. However, this recession is different. The long lockdown was very profitable for technology companies generally. By some estimates, COVID-19 precautions will be continuing at least through the first quarter of 2021. The acquisition trend is expected to continue for now.