A restrictive stance on mergers and acquisitions stifles the entire startup ecosystem by removing viable exit paths. Allowing M&A to flourish provides the liquidity events that encourage venture capitalists to deploy risk capital into the next generation of innovative companies.

Regulatory crackdowns on M&A have a chilling effect far beyond the companies involved. When successful startups can't exit via acquisition, capital gets trapped. This prevents VCs from returning money to LPs, who in turn can't fund the next generation of founders, grinding the innovation engine to a halt.

Platforms grew dominant by acquiring competitors, a direct result of failed antitrust enforcement. Cory Doctorow argues debates over intermediary liability (e.g., Section 230) are a distraction from the core issue: a decades-long drawdown of anti-monopoly law.

As traditional economic-based antitrust enforcement weakens, a new gatekeeper for M&A has emerged: political cronyism. A deal's approval may now hinge less on market concentration analysis and more on a political leader’s personal sentiment towards the acquiring CEO, fundamentally changing the risk calculus for corporate strategists.

The narrative of AI doom isn't just organic panic. It's being leveraged by established players who are actively seeking "regulatory capture." They aim to create a cartel that chokes off innovation from startups right from the start.

When an industry is threatened by an external force like AI, consolidation is a key defensive strategy. Ironically, this is when regulators are most likely to intervene. Because these declining companies are knowable and easy to analyze, it makes it easier for regulators to block deals, preventing a necessary survival response.

Venture capitalist Bill Gurley explains "regulatory capture" as a phenomenon where established companies influence regulations to their own benefit. This tactic is used not for public good, but to block new competitors, raise prices, and solidify market dominance, particularly in industries like healthcare and finance.

The fear of killer AI is misplaced. The more pressing danger is that a few large companies will use regulation to create a cartel, stifling innovation and competition—a historical pattern seen in major US industries like defense and banking.

The attempt to preserve competition by blocking the JetBlue-Spirit merger ultimately led to Spirit's likely failure. A better regulatory approach focuses on ensuring fair access to limited resources (like airport gates) rather than blocking consolidation, a natural market mechanism.