Can large companies simply buy large companies from smaller industries in order to a) get passive income and b) have alternate industries to fall back on?

Question

EDIT: And they just leave those sub companies as they are (provided they are already making profit), so the only thing that changes it that the excess profit could go to the whole company; they leave it to function the same

ALSO EDIT: Not necessarily passive income (mb) but just to expand the larger companies reach- theoretically could one country have non-negligible stakes in every major industry through this method?

Thank you all this was actually very helpful 😀

In: Economics

Answer 1

Because truly passive income is probably so low it makes for a bad investment compared to an active one. And there are very few companies that have such a large market share that the best investment isn’t trying to get more of it. Or at least an adjacent market they can feed into their primary market. Think of Microsoft buying tech companies and then developing their product to use windows