Hmm, monopolists sure invest a lot of money into buying out technology from smaller companies. It's not for the purpose of promoting stagnation, it's for the purpose of owning the innovation that's out there. Microsoft, for instance seems to have remained at the forefront of technology despite having a virtual monopoly. It's their main interest to prevent other innovation from surpassing them, not necessarily to cause stagnation.
Your Microsoft argument holds up, but Microsoft is not the only monopolist. Let's take other companies, like for instance pharmaceutical and oil company's. It's a shame to innovate on herbs that grow in you backyard and cure cancer or fuel that is unlimited and environment friendly if you consider that this will bust companies.
Some company's buy out other companies because they don't want and can't handle the innovation. Think of the electrical car which completely vanished years ago and only now comes back, years later, again in prototypes. All cars sold could have been solar or otherwise powered by now.
My argument seems a bit paranoid, and it is. But it holds up if you think about it.
Of course there are other companies, called Private investors who buy a company for much money, cut it up and sale it with profit to anyone who wants to buy it. These are the companies that cause stagnation and destroy many "good" companies.
The amount of money payed for companies sometimes seems much, but it really is nothing if you see how much money can be made. Google bought Applied Semantics
for 102 Million dollars and developed Adsense and Adword out of it, which makes up 98% of google's revenue which is 16.5 Billion (2007). Google itself on the market cap is worth 179.07 Billion dollar (2008
). Not bad for an investment of 102 Million dollars.