Technology is one of the most highly-paced industries in terms of acquisitions, most certainly in part because of Google. To date, a total of 617 acquisitions have been made by the Big Five (Apple, Microsoft, Google, Amazon and Facebook), and one-third of those acquisitions were by Google. In 2017, one can expect to see Google focusing on acquisitions for growth and customer support, to catch up to Amazon and Microsoft, both of whom are well known and held in high regard for their business relationships.
According to Don Harrison, a Google corporate development leader. the company’s M&A activities are focused on AI this year. Whilst he expects Google to throw a wide net, Harrison also expects that not all deals will succeed since “M&A will never be 100% successful.”
He also said:
“Because we’re product-focused and product-driven, we’re reactive to the environment, […] When we see products or developments or large companies that are solving a problem in a new way, that drives M&A interest.”
Moreover, EY predicts that “artificial intelligence (AI) and machine learning will be at the centre of many corporate deals,” in 2017.
With 20 deals concluded in 2016, Google is looking to continue its expansion and has certainly started 2017 strong, with the acquisition of Fabric, a small but important target as it is a leading mobile app developer, used by over 550,000 developers. To this end, 30 acquisitions were made in by Google in mobile-sphere, reflecting the growing popularity of its Android software.
Two Smart Moves
Kaggle was established in 2010, and was subsequently used by over 800,000 data scientists to “explore, understand, and contribute to machine learning.” The platform is an online service that creates and hosts data science and machine learning competitions, to progress the value of the field. Acquiring Kaggle presents Google with unrivalled access to a wealth of machine learning and data scientists, able to support upcoming Google operations, not only entrenching Google firmly within the data science community but also keeping it competitive as it faces increasingly sophisticated competition created by the AI sphere becoming more nuanced and open.
Whilst the company has no revealed the financial specifics, this acquisition is an important one, as expressed by Fei-Fei Li, chief scientist of Google Cloud AI and Machine Learning, since it will “lower the barriers of entry to AI and make it available to the largest community of developers, users and enterprises, so they can apply it to their own unique needs.” Furthermore, a key component of success in the technological era for companies is talent acquisition.
The competition brings together the best and brightest experts and future hopefuls in the data industry and machine learning sphere, concentrating them in a space that Google now has on tap. Through acquiring talented scientists, Google can ensure that it remains top-dog in acquiring top talent, broadening its horizons and focusing on several areas of AI.
Moreover, by facilitating greater access to Google’s cloud service and infrastructure, Google can offer powerful tools to businesses – including infrastructure, training, talent acquisition and the ability to store large data sets. This will certainly sure-up the foundations of an already successful Big Data service, including clients such as such as HSBC, SAP, Disney, Verizon and eBay.
Google also acquired AppBridge, a company that specialises in assisting companies with relocating files and data into the Google cloud. This acquisition has surprised noone, however, since AppBridge not only specialised in Google Software but has also partnered with Google.
This acquisition holds key value generation for larger consumers of Google cloud systems, since now with greater oversight, support and capital capacity, AppBridge can help more businesses with larger data sets.
Whilst Google is touting its large client list filled with reputable brands, it still has some way to catch up to Amazon Web Services, which currently tops Microsoft, Google and IBM’s combined market share, at 40%. Part of the issue may be related to Google’s image in recent years.
Google’s cloud services characterisation “ as a good choice for start-ups and consumer apps” may be hindering Google’s expansion and relationships with bigger business. Consequently, in the market’s quest to facilitate more mature businesses with larger data sets, smaller providers in the Cloud Market may suffer as Google and others push for greater market share.
It is here that Google’s senior vice president of Cloud, Diane Greene, promoted the idea of Google partnerships and Alphabet investing heavily in developing customer support, conveying the idea that Google is growing rapidly through its own sales force and the sales force of its partners.
Under pressure from Microsoft, Amazon and quick grower Alibaba in the cloud service market, Google will seek to continue its dominating M&A performance into 2017, with an average of 12 acquisitions per year.
Focusing on increasing the talent at its disposal as well as its customer reach, the acquisition of Kaggle presents Google’s plan as a “start as you mean to go on.” Key movers to watch are up and coming AI developers, and data science companies, as the Big Five will seek to diversify their hold on AI, Internet of things and Big Data spheres, particularly as they become more specialised and fragmented in 2017. As these areas open to more technological innovations, one can expect Google to be seeking acquisition targets.