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To Combine or Not? Consolidating Horizontal Acquisitions in Multi-sided Market
The digital economy is increasingly characterized by parent companies that own multiple horizontal platforms competing on the same side of a multi-sided market. Meta operates both Facebook and Instagram as separate social media services; Alphabet maintains Google Search alongside YouTube; and in the food delivery sector, Uber acquired Postmates while continuing to operate UberEats. A central question in multi-sided market is whether such horizontal acquisitions lead to full platform integration or sustained coexistence---and how consumers respond to the resulting market restructuring. Understanding these dynamics and how the multi-sided nature changes the decision of how to optimally integrate firms.
In this paper, we study the consumer-level consequences of Uber's acquisition of Postmates, which closed in December 2020. At the time, UberEats announced plans to integrate the platforms, which remain pending.\footnote{For details, see \hyperlink{https://help.uber.com/en/ubereats/restaurants/article/postmates-faqs?nodeId=063283d6-2602-490d-89b7-c9c15a07cfce}{here}} We examine whether Postmates users shifted spending to UberEats, or if the merger disruption redirected demand to competitors like DoorDash and Grubhub. We use a novel panel dataset of consumer receipts tracking spending across all major food delivery platforms before and after the merger.
Our empirical strategy employs an Age--Period--Cohort (APC) decomposition following oblander2023frontiers. The key insight of this approach is that consumer spending patterns on a platform reflect three distinct forces: age effects (how spending evolves with tenure on the platform), cohort effects (systematic differences across users who joined at different times), and period effects (time-varying shocks that hit all users simultaneously, such as a merger). By estimating these three components from a cohort $\times$ month panel and then forecasting what the period effects would have been absent the merger using an ARIMA counterfactual, we isolate the causal merger effect as the structural break in the period component.
We find a statistically significant decline of $-40.33$ percentage points in the Postmates budget share following the merger. However, the reallocation of spending was not directed solely toward UberEats, which gained only $+19.79$ pp. Our decomposition of other platform outcomes reveals that DoorDash ($+7.50$ pp) and Grubhub ($+10.49$ pp) captured a substantial fraction of the diverted Postmates spending, suggesting that the merger created competitive opportunities for rival platforms rather than consolidating demand within the Uber ecosystem.
Heterogeneity analysis provides further insight into which consumers drove these patterns. Splitting the sample by pre-merger Postmates budget share, we find that high-dependence users experienced the most pronounced declines ($-56.17$ pp), while low-share users saw a smaller shift of $-14.72$ pp. When we further interact budget share with MSA-level UberEats market concentration, the effect is sharpest among high-share single-homing users in high-UberEats markets ($-88.18$ pp)---consistent with the acquisition having the largest bite where the acquirer platform was most prominent. In contrast, consumers who had low budget allocated to Postmates experienced a more modest decline ($-14$ pp) and proved more “sticky”: their budget allocation was less affected by the merger, suggesting that casual, diversified users had less reason to adjust their behavior.
We further estimate a Difference-in-Differences (DiD) framework that exploits cross-market variation in merger exposure. Specifically, the DiD design defines treatment based on whether an MSA had above-median pre-merger UberEats market share and estimates the differential effect on Postmates spending in treated versus control markets. The DiD specification curve remains stable across eight progressively controlled specifications. In addition, the heterogeneous treatment effect in DiD shows that users with a high Postmates budget share in treated markets experienced the largest declines. The results from DiD are comparable in direction and magnitude to the heterogeneous effect result in the main APC model. However, by construction, the DiD captures only the differential effect across markets and cannot recover the merger's level effect, which is common across markets. The APC decomposition complements the DiD by measuring the total merger-induced shift in spending, revealing that the overall effect is larger than what the cross-market comparison alone would suggest. This finding is consistent with the merger affecting consumer behavior through platform-wide channels (e.g., branding changes, app integration, supply-side consolidation) that operate independently of local market structure.
Our paper contributes to several strands of the literature. First, we contribute to the study of mergers and acquisitions in multi-sided platform markets. While a growing theoretical literature examines how platform mergers affect competition and welfare, and recent work explores merger simulation in digital markets kawaguchi2021merger, empirical evidence on the consumer-side consequences of horizontal platform acquisitions remains scarce.\footnote{More broadly, our work relates to a growing empirical literature on network effects and competition in platform markets. Foundational theoretical models of multi-sided platforms rochet2003platform, armstrong2006competition, weyl2010price predict that merging platforms can increase user value through network effects, but that platform competition may nonetheless benefit consumers through product variety and differentiation. Empirical tests of these predictions remain limited: rysman2004competition finds positive cross-side network effects in Yellow Pages, while dube2010tipping document market tipping in video game consoles. In the context of platform mergers, li2020measuring exploit the combination of two ride-hailing platforms to estimate network effects, and cullen_outsourcing_2020 study local market structure in online services. } farronato2020dog study network effects in a digital platform merger using a difference-in-differences design and similar to our results find limited consumer gains from consolidation. We compliment their work by looking at the market with competitors beyond the two merging platforms. reshef2019smaller examines how platform entry affects incumbents in online food delivery. mccarthy2023did provide descriptive evidence on effect of multiple mergers among platforms. We provide individual-level evidence showing that the intended demand consolidation may fail when consumers have easy access to substitute platforms---a finding with direct implications for merger review in digital markets. Second, we contribute to the empirical M&A literature in the food delivery industry. Generalizing empirical results in multi-sided markets is challenging because each market differs in the strength of network effects and degree of platform differentiation. Our analysis uses granular consumer receipt data that tracks individual spending across all major platforms, allowing us to trace exactly where displaced Postmates spending migrated after the merger. Furthermore, we provide evidence on how multihoming might effect the decision to consolidate merged horizontal platforms. Multi-homing behavior, a central feature of food delivery markets, has received growing theoretical attention bakos2019multihoming, though empirical evidence on how multi-homing mediates the effects of horizontal acquisitions is scarce. Our paper provides direct evidence on this margin for a M&A point of view. Third, we demonstrate the value of Age--Period--Cohort decomposition methods---originally developed in marketing and demography oblander2023frontiers, blanchard2025game---for identifying causal effects of discrete corporate events in panel data. By benchmarking the APC estimates against a standard DiD design, we show that the two approaches are complementary: the DiD captures differential effects across markets while the APC recovers the total merger-induced shift in consumer behavior.
The remainder of this paper is organized as follows. Section (ref) describes the APC methodology and identification strategy. Section (ref) presents the main event study results, heterogeneity analysis, and comparison with DiD. Robustness checks are provided in the appendix.
We obtained a proprietary data set containing user-level transaction data which is supplemented with covid variables such as work from home order and covid cases across MSA.
We acquired proprietary data of the users from two lifestyle email apps that records all the email receipts of consumer orders from the four major food delivery apps from June 2019 to April 2022. Figure (ref) show display of the two apps.
There are a total of \CatchFileDef{\tempnum}{tex/receipt_nreceipts.tex} \num{\tempnum} receipts from \CatchFileDef{\tempnum}{tex/receipt_nusers.tex} \num{\tempnum} active users in the dataset. Table (ref) shows the summary statistics for the number of active users, the number of orders, and the average amount paid by each platform. There are fewest users on Postmates but making the highest average amount paid per order.
The receipts data contain consumers food delivery orders on four platforms: Doordash, Grubhub, Postmates, and UberEats. There are variations in consumer compositions on these platforms across geographic areas and over time.
To further control for user specific spending habits, we concentrate on looking at percentage of total budget spent across platform each month.
Our analysis focuses on consumers who used Postmates prior to the merger announcement in December 2020. We construct the analysis sample through the following steps. First, we restrict to users with at least one Postmates transaction before December 2020 in a metropolitan statistical area (MSA) containing at least 10 such users. For users appearing in multiple MSAs, we assign them to their primary MSA based on the highest number of total orders. We then apply two data quality filters: (i) we remove users whose pre-merger Postmates budget share is below 5%, as these represent negligible Postmates engagement; and (ii) we remove users who had zero Postmates spending in more than 50% of their post-adoption pre-merger months, as these represent users who had effectively disengaged from the platform before the merger.
We employ an Age--Period--Cohort (APC) decomposition to identify the causal effect of Uber's acquisition of Postmates (December 2020) on consumer spending allocations. The APC approach identifies the merger effect through a structural break in period fixed effects---the time-varying component that remains after absorbing lifecycle (age) and selection (cohort) effects. We implement the cohort-level decomposition similar to the one used in oblander2023frontiers.
We aggregate it to the cohort $\times$ month level, where cohorts are defined by the month of a user's first Postmates order. Let $c$ index cohorts, $t$ calendar months, and $a = t - c$ tenure:
where $\bar{Y}_{cat}$ is the cohort-month average outcome, $\alpha_{a}$ are age fixed effects, $\phi_{c}$ are cohort fixed effects, $\gamma_{t}$ are period fixed effects, and $\bar{\mathbf{X}}_{cat}$ are cohort-month averaged controls. Observations are weighted by cohort size $N_{c}$.
The control vector $\bar{\mathbf{X}}_{cat}$ includes three blocks: (i) covid controls (MSA $\times$ time-varying)---standardized total cases, squared cases, workplace closure mandates (partial and full), gathering restrictions (100- and 10-person thresholds), and stay-at-home orders; (ii) user $\times$ time controls---an indicator for active transaction syncing and indicators for concurrent multi-platform usage on UberEats, DoorDash, and GrubHub; and (iii) restaurant supply controls---counts of new and overlapping restaurants on Postmates and competing platforms. All controls are averaged to the cohort-month level; missing values are imputed as zero.
\paragraph{Detrending with seasonality.} We detrend using a model that accounts for seasonality via a B-spline:
where $\text{bs}(\cdot, 4)$ denotes a B-spline with 4 internal knots on the month-of-year, fit on pre-merger data only. in appendix (ref) we look at sensitivity to detrending by varying the number of knots.
\paragraph{ARIMA counterfactual.} We model the pre-merger residuals as an AR($p$) process:
The lag order $p$ is selected by minimizing AIC over $p \in \{0, 1, \ldots, 6\}$. The fitted AR model forecasts the counterfactual post-merger trajectory $\hat{r}^{cf}_{t}$, and the merger lift at each post-merger month is:
In appendix (ref) we provide more details on sensitivity to AR search range and ACF/PACF diagnosis with changes to covariates used.
The fundamental APC identification challenge is the exact linear dependence $a = t - c$. The separate age, cohort, and period fixed effects are not individually point-identified, but the detrended period effects---and hence the structural break at the merger---are identified under the assumption that the pre-merger trend would have continued absent the merger.
Following blanchard2025game, we validate the APC identifying assumption by examining whether cohorts that experienced the merger at different tenures followed parallel age paths before the merger. If the age effects are stable across cohorts, any post-merger divergence can be attributed to the period (merger) effect rather than confounding cohort--age interactions.
Figure (ref) compares the raw Postmates budget share by tenure for “treated” cohorts (those who experienced the merger at a given tenure) versus “not-yet-treated” cohorts (those who had already passed that tenure before the merger). The two panels show merger impacts at 9 and 12 months of tenure. Pre-merger parallel paths support the identifying assumption.
Postmates budget share by tenure: treated vs.\ not-yet-treated cohorts. Treated cohorts experienced the merger at the indicated tenure; not-yet-treated cohorts had already passed that tenure pre-merger. Parallel pre-merger paths validate the APC identifying assumption. Additional validation using pre-merger outcomes by cohort and tenure is presented in Appendix (ref).
Table (ref) reports the estimated post-merger shifts for all dependent variables. Each column corresponds to a different outcome; the coefficient represents the average gap between actual and counterfactual period effects over the post-merger window, with standard errors in parentheses. The bottom panel indicates the fixed effects and controls included. We see that postmates users, decreased their budget, on average by $40\%$, which led to gain in budget allocated to the acquired platform i.e,\ UberEats ($19.8\%$) but also led to increase in budget percentage spent on competing firms Doordash ($7.5\%$) and Grubhub ($10.5\%$).
Figure (ref) presents the event study for Postmates budget share. The solid line shows the actual detrended period fixed effects; the dashed line shows the AR-based counterfactual forecast. The shaded regions represent 95% confidence intervals. The gap between the actual and counterfactual series after December 2020 represents the estimated merger effect.
Figure (ref) extends the analysis to all dependent variables: budget shares for each platform (Postmates, UberEats, DoorDash, GrubHub) as well as total spending and order counts.
We examine heterogeneity along two dimensions: pre-merger Postmates budget share and the interaction of budget share with local UberEats market concentration. Figure (ref) presents the event studies for these subgroups. Additional heterogeneity analyses by multi-homing status, MSA market structure, and their interactions are presented in Appendix (ref).
Table (ref) summarizes the post-merger shift estimates across all subgroups.
In this section, we complement the main results by using a difference in difference approach, which identifies the merger effect through cross-market variation in competitive exposure: MSAs are assigned to the treatment group if their UberEats market share exceeds the sample median:
The estimating equation is a two-way fixed effects difference-in-differences model:
where $y_{imt}$ is the percentage of total food delivery spending allocated to Postmates by consumer $i$ in MSA $m$ at month $t$; $\text{Treated}_{m}$ is the binary treatment indicator defined in Equation (ref); $\text{Post}_{t} = \mathbf{1}[t \geq \text{Dec 2020}]$ indicates the post-merger period; $\mu_{m}$ and $\lambda_{t}$ are MSA and year-month fixed effects, respectively; and $\mathbf{X}_{imt}$ includes controls added cumulatively across eight specifications: sync status, Postmates tenure, COVID-19 restrictions, multi-platform indicators, budget share categories, and restaurant supply variables. Standard errors are clustered at the MSA level. Note that here coefficient $\beta$ captures the average treatment effect on the treated---the differential change in Postmates spending share for consumers in high-UberEats-share MSAs relative to those in low-UberEats-share MSAs, after the merger.
\paragraph{Heterogeneous DiD.} Similar to our APC estimate we also estimates heterogeneous treatment effect for high pre-merger Postmates dependence as captured by higher than 70% of the online food delivery budget allocated to Postmates, i.e.\ ($s_{i,\text{PM}} > 70\%$):
where $\text{HighShare}_{i} = \mathbf{1}[s_{i,\text{PM}} > 70\%]$ and $\text{LowShare}_{i} = \mathbf{1}[s_{i,\text{PM}} < 25\%]$. The specification curve for $\hat{\beta}_{2}$ (Figure (ref)) captures the additional effect of the merger on high-dependence consumers in treated MSAs relative to low/medium-share consumers.
\paragraph{DiD results}
We present results from a specification curve analysis that progressively adds control variables to the baseline two-way fixed effects model. This approach demonstrates the stability of the estimates across different modeling choices.
The specification curve in Figure (ref) plots the DiD coefficient $\hat{\beta}$ from Equation (ref) across eight specifications that progressively add controls: (1) MSA and time fixed effects only; (2) sync status; (3) Postmates tenure; (4) COVID-19 controls; (5) multi-platform indicators; (6) budget share categories; (7) Postmates restaurant controls; and (8) the full model including other-platform restaurant controls.
{Heterogeneous Effects: High Postmates Share Interaction}
Figure (ref) presents the specification curve for the interaction coefficient $\hat{\beta}_{2}$ from Equation (ref), capturing the differential effect on high-dependence Postmates consumers.\
\paragraph{Comparison of approaches.} The DiD and the cohort-level APC decomposition identify the merger effect through fundamentally different sources of variation. The DiD exploits cross-sectional variation---comparing high- vs.\ low-UberEats markets before and after December 2020. By construction, the DiD coefficient $\hat{\beta}$ captures only the differential effect in high-UberEats markets relative to low-UberEats markets. If the merger also affected spending in low-UberEats markets (e.g., through platform-wide integration, branding changes, or supply-side consolidation), the DiD understates the total effect. The cohort-level APC decomposition (Section (ref)), in contrast, exploits time-series variation, identifying the merger through a structural break in period fixed effects after absorbing lifecycle (age) and selection (cohort) effects. It therefore captures the overall merger effect on all Postmates users regardless of local market structure.
\paragraph{Heterogeneous effects comparison.} Both approaches find that the merger's impact varies with users' pre-merger Postmates dependence, but they measure different margins. The DiD interaction coefficient $\hat{\beta}_{2}$ measures the additional effect of high Postmates spending share within treated markets only---it asks whether high-share users in high-UberEats MSAs experienced a larger decline than low-share users in those same MSAs. The APC heterogeneity results (Table (ref) and Figure (ref)) instead measure the post-merger shift in levels for each subgroup across the full sample. The APC results by budget share $\times$ high-UE MSA (Figure (ref)b) show that the merger effect is most pronounced among high-share users in markets where Uber had the strongest competitive presence---precisely the subgroup where the DiD treatment bite is largest. This alignment across the two identification strategies reinforces the finding that consumers most dependent on Postmates experienced the largest budget reallocation following the merger. However, the APC approach complements the DiD by additionally revealing the magnitude of the overall merger-induced shift, while the DiD provides a useful lower bound on the treatment effect in the most directly affected markets.
This paper examines the consumer-side consequences of Uber's acquisition of Postmates using an Age--Period--Cohort decomposition that isolates the merger's causal effect from lifecycle and selection dynamics. Our results yield three main findings with implications for understanding horizontal acquisitions in multi-sided platform markets.
First, the merger caused a substantial decline in Postmates budget share ($-40.33$ percentage points), confirming that the acquisition disrupted existing consumer relationships with the target platform. However, this spending reduction did not translate into a corresponding increase in UberEats usage. While UberEats gained $+19.79$ pp, DoorDash ($+7.50$ pp) and Grubhub ($+10.49$ pp) collectively absorbed a significant share of the reallocated spending. This finding suggests that in markets with readily available substitutes, horizontal acquisitions may inadvertently benefit rival platforms by disrupting consumer habits without fully redirecting demand toward the acquirer.
Second, our heterogeneity analysis reveals that the merger's impact was concentrated among high-dependence Postmates users, particularly those in markets with strong UberEats presence ($-88.18$ pp for high-share single-homers in high-UE MSAs). In contrast, multi-homing consumers with diversified platform usage proved more resilient to the merger shock ($-35.14$ pp). This pattern implies that consumers with established relationships across multiple platforms are less sensitive to acquisition-induced disruptions, which has implications for how firms should sequence post-merger integration strategies.
Third, our comparison of the APC approach with a standard Difference-in-Differences design demonstrates that the two methods are complementary. The DiD captures the differential effect across markets with varying competitive exposure, while the APC recovers the total merger-induced shift in consumer behavior. The fact that the APC estimates exceed the DiD estimates suggests that a substantial portion of the merger's effect operates through platform-wide channels---such as branding changes, app integration, and supply-side consolidation---that are common across all markets and therefore missed by cross-sectional comparisons.
Our findings carry implications for both merger policy and platform strategy. For antitrust authorities, the evidence that displaced demand flows to competitors rather than to the acquirer suggests that horizontal platform mergers may be less anticompetitive than traditional market concentration metrics would imply. However, the welfare implications depend on whether rival platforms offer comparable quality and variety. For platform operators considering horizontal acquisitions, our results highlight the risk that integration-induced disruptions can erode the acquired customer base before the intended demand consolidation materializes. The stickiness of multi-homing consumers suggests that more diversified users are more "sticky" in their demand and might be less likely to switch platforms.