Antitrust regulation and technological innovation in China’s digital platforms: evidence from data-driven M&A under the 2021 Anti-Monopoly Guidelines

This paper examines how platform-specific antitrust regulation shapes innovation using China’s 2021 Anti-Monopoly Guidelines as a quasi-natural experiment. We develop a model where an incumbent platform allocates resources between internal R&D and data-driven M tighter merger scrutiny lowers M&A returns and induces substitution towards R&D. Using a panel of 112 listed platform firms (2016–2024) and a difference-in-differences design exploiting continuous variation in pre-policy M&A reliance, we find that the Guidelines significantly reduce M&A activity (18% in deal counts, 22% in value) while increasing R&D intensity (12%), invention patents (15%), patent quality, and exploratory innovation. Mechanism tests confirm resource reallocation from M&As to R&D drives these effects. Results suggest well-targeted antitrust can enhance innovation by reshaping the mix between external and internal strategies.