For a while now, we have been witnessing tech giants reallocating an ever-increasing share of their enormous budgets from independent research and development towards mergers and acquisitions. While it can’t be said that the R&D departments of firms such as Google or Facebook are dramatically shrinking, the returns of these departments however are increasingly diminishing and are being replaced by the acquisition of small and innovative startups.

To name only a few examples, Google’s alphabet has bought, on average, one company a month in 2017 alone, which is considered to be austere relative to its peak years when this figure stood on one new merger per week. Facebook, as well, heavily relies on the acquisition of outside knowledge to ramp up its Augmented Reality shenanigans and advanced features, such as its eerily accurate face recognition engine.

This tendency will probably be even more pronounced in 2018. With the recently approved amendments to the US tax code, many analysts anticipate an avalanche of funds pouring from overseas tax havens towards the shopping budgets of Silicon Valley’s tech empires.

The startup ecosystem, including its VCs and accelerators, is evidently aware of this situation. It is becoming harder and harder to find a startup that takes the option of an independent existence seriously. The ultimate goal of small tech companies is not the development of new applications, networks, or consumer products, but the creation of tools, services, knowledge, and even organizational structures, which the big guys will eventually find useful and add to their ever growing inventory of acquired assets.

Through this process, the once disruptive startup space is increasingly becoming the outsourced R&D department of an incumbent tech oligopoly.

This may sound grim, but it is also a natural development and by no means the end of the road. Acquiring knowledge on an almost infinite global market is, financially speaking, much more efficient than betting on the results provided by an in-house R&D team, which may or may not deliver. Acquired startups, on the other hand, can focus on their technology and relax in regards to user acquisition in a market that is already captured by existing network effects.

We should presume that this kind of behavior will not only continue, but that it will probably trickle down to lower ranks of tech companies. For the time being, M&A is a complicated, long, and arduous process which the giants are best at, but with the increasing efficiency of the M&A market, this might soon change.

There are already initiatives in place to completely transform M&A and adapt it to the upcoming area of rapid transfer of IP ownership that will also be accessible to low(er)-budget players. Estonian “IP Market” LEXIT is one example. The Tallinn-based company seeks to turn IP, departments, and entire companies, into liquid assets that can be traded on a platform marketplace akin to eBay, while legal processes are outsourced to third parties.

With the emergence of platform approaches of this kind, we might soon find ourselves in a world in which increasingly smaller players offer tools, applications, and even unfinalized code on a market that is as liquid and as accessible as online marketplaces for consumer goods and short-time renting. This would not only make it easier for new participants to independently enter the tech industry, but also allow medium-sized companies to tap in to the vast reservoir of outsourced R&D from which tech giants draw to maintain their advantages.

It is, of course, hard to predict where all this might lead to, but we can rely on past experience to form a hypothesis. Platform marketplaces such as AirBnB for example have completely transformed a market, which until then was completely dominated by giant, capital intensive real-estate owning entities. Without adding anything but an environment on which consumers and providers can find each other, the AirBnB project completely transformed the hospitality industry and even manipulated real-estate prices around the globe.

It might sound preposterous to claim that making it easier for smaller players to exchange IP assets would give Google a run for its money. However, as we know, stranger things have happened before.

Given that technology, innovation, and regulation keep up with this ever-evolving market, it might just be the case that the fears of monopolistic consolidation widespread today will soon enough be replaced by a new vision of more decentralized markets. With IP and corporate assets moving swiftly between buyers and sellers, increased competition would be the case rather than a market dominated by a few actors and their seemingly unlimited acquisition budgets.