The $2.6 billion acquisition of Looker, Google Cloud "Great Leap Forward"?
2024-04-19


In order to enhance the competitiveness of the cloud business, Google began to work with data companies.
 
On June 4, it was announced that Google would buy Looker, a big data analysis company, for $2.6 billion in cash. The acquisition is expected to be completed by the end of this year. This is the third largest acquisition in Google's 21-year history, behind Motorola and Nest, the smart home company, and the largest acquisition in the cloud business so far.
 
It was also the first major acquisition by Thomas Kurian, the new CEO of Google's cloud computing business. After the acquisition, Looker will merge into Google's cloud division.
 
Anxiety about Google's Cloud Business
 
In August 2006, Eric Schmidt, CEO of Google, first introduced the concept of cloud computing. Today, in the cloud computing market, Amazon AWS is the dominant company, accounting for about a third of the world's market share. Microsoft Azure has also maintained a strong growth momentum. With Amazon and Microsoft's cloud business booming, Google has become anxious about the cloud business.
 
At the end of April 2019, Google reported quarterly revenue of $36.34 billion, up 16.8% year-on-year, less than market expectations of $37.33 billion or 20%. According to Reuters, nearly 17% of revenue growth was the lowest in three years, compared with 28% in the same period last year. Key indicators such as Google's operating profit margin, operating income and paid clicks were all below expectations. At the same time, capital expenditure almost doubled compared with 2017. The company said that most of the cost growth in recent quarters was related to the development of cloud business.




Although Google continues to invest in the cloud business, it ranks third in 2018. But according to Canalys, Google accounts for only 8% of the cloud computing market, half of Microsoft's and a quarter of Amazon's. At the same time, Aliyun is also catching up. Google is facing an awkward situation.
 
Anxious Google has come to realize the importance of cloud business. According to its earnings report, the company's capital expenditure increased by 102% in 2018 to $25.14 billion, the highest growth rate in four years. These capital expenditures are mainly used for investing in technological infrastructure, including data centers and equipment. The main purpose of the expansion of data centers is to develop its cloud computing business.
 
In February 2019, Curian, the new CEO of Google Cloud, said that Google would invest more in the cloud business. This shows that Google is adding weight to the field of big data and cloud computing.
 
Why Looker?
 
Looker was founded in 2012, headquartered in Santa Cruz, California, with about 800 employees. The company has raised nearly $178 million since 2013. By the end of March 2017, Looker had secured a $81.5 million D round of financing led by Capital G, a growing equity venture capital owned by Alphabet, the parent company of Google. Looker's existing investors include Goldman Sachs, Kaipeng Huaying and Red Spot. The company has raised a total of 281 million dollars in venture capital in its history, with a valuation of $1.6 billion in the latest round of financing last year.




As a result of Google's venture capital involvement in Looker's private equity investment, the two companies have more than 350 common customers, including BuzzFeed, Yahoo, Hurst International Group, the U.S. publishing giant, and so on. As a SaaS company, Looker has a good business growth. More than 1,700 industry leaders, including Amazon, IBM, Lyft, Sony, Spotify and The Economist, are using Looker's data analysis cloud tools.
 
What will Looker bring to Google?
 
Faced with the squeeze of Amazon's dominance and other giants, Google has taken the form of mergers and acquisitions or cooperation to enhance its competitiveness. In a press statement, Curian said the acquisition of Looker would add data analysis tools to Google cloud customers, help Google provide specific analysis for targeted vertical industries, and continue to implement Google's "cloud strategy".
 
Simply put, the role of Looker is to increase data analysis tools and accelerate the implementation of Google's "multi-cloud strategy".
 
Some insiders pointed out that Google has core algorithms, top-level framework and massive data, but the shortcoming is that it lacks external analysis tools. Without supporting tools to make good use of these core resources, it will be impossible to reach more users, expand the B-end market, and bring difficulties to commercialization. Therefore, Looker just fills in this short board.
 
On the other hand, after acquiring Looker, we can continue to better implement Google's "cloud strategy". In April 2019, at Google Cloud NEXT 2019, Google launched Anthos, a cloud management platform based on Google cloud services.




Anthos's selling point is that it "brings together the simplicity of open source platforms and the freedom to choose the right cloud partners for their work", that is, customers can run competitors'clouds on this platform. This is a management and migration tool that can run on almost all clouds, so that enterprises can manage application instances from one place across platforms. In addition, it can easily transplant applications to Google's cloud platform. It provides Google with a way to remain neutral in the cloud applications it manages, while also allowing easy transmission in the cloud environment. Cloud management is a big challenge for organizations, but it could also be a real advantage for Google.
 
In addition, Looker's business intelligence tools can work on Google's cloud as well as integrate with other databases competing with Google's products. Curian also said on a previous conference call that Looker would continue to work with other products, such as Amazon's Reshift and Microsoft's Azure SQL server. It continues the integration of data resources across cloud platforms and expands the ability of data information visualization.
 
Write at the end
 
Looker is one of the best business intelligence analysis tools in the cloud computing era. It will benefit from Google's rich resources. Cowen, an American investment research firm, estimates that Looker's revenue will reach about $140 million in 2019. Boris Evelson, an analyst who focuses on data analysis at Forrester, a US Technology Market Research firm, said Google's acquisition of Looker was a wise choice.
 
But Google is currently facing anti-trust investigations by federal regulators in the United States and the risk of future spin-offs, and the $2.6 billion acquisition may still not be able to help Google regain more cloud computing market share.


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