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Google topping tech M&A market in 2010

As Microsoft and Apple competition heat up, Google gets more active on acquisitions front

By , Network World
July 07, 2010 02:55 PM ET

Network World - Google is well on its way to acquiring more venture-backed startups than any other company in 2010, after years of watching rivals like Cisco, IBM, and Microsoft dominate the M&A market.

As July began, Google announced its intention to acquire ITA software, a maker of air travel flight information technology, continuing a blistering pace that has seen the brainchild of Larry Page and Sergey Brin purchase about 20 companies in the past 12 months. As Google steps up competition against Microsoft and Apple, it is increasingly purchasing technology and key talent from start-ups, rather than developing it in-house, says Scott Austin, the editor of Dow Jones VentureWire.

Tech M&A deals of 2010

Google went more than half a year without announcing any acquisitions in late 2008 and early 2009, at a time when many other tech companies slowed spending because of global economic turmoil.

But last October, CEO Eric Schmidt announced "We're open for business, making strategic acquisitions, both large and small," and he has not gone back on his word. So far, Google is leading the M&A market in terms of the number of acquisitions, according to data from Dow Jones VentureSource.

Google has never exactly shied away from acquisitions, but it has typically acquired fewer companies than the most active tech buyers, while focusing on smaller plays – with notable exceptions such as a $3.1 billion deal with DoubleClick and a $1.65 billion deal for YouTube

Google hasn't made any billion-dollar purchases thus far in 2010, with its $750 million purchase of AdMob completed in May topping the list.

As previously reported in Network World, in 2010 Google's purchases include BumpTop, maker of technology for giving desktops a 3D interface; social search vendor Aardvark; reMail, which makes an iPhone app for searching Gmail and IMAP e-mail accounts; Web-based photo editing vendor Picnik; the Microsoft Office add-on collaboration tool DocVerse; mobile phone application startup Plink; Agnilux, stealthy hardware startup formed by ex-Apple/PA Semi employees; and Episodic, which makes live video streaming technology that should complement YouTube.

"I think we expected them to acquire a lot of venture-backed companies, but not this many this quickly," Austin of Dow Jones VentureWire says. "They've always tried to develop things in-house. But now they're expanding into so many other areas, like mobile and even energy. They have a lot more competitors, and they need to stay acquisitive to compete."

Google has acquired eight venture-backed companies in 2010 (including the purchase of ITA Software, which hasn't been completed yet), double the amount of nearest competitor IBM, according to Dow Jones VentureSource.

The organization tracks acquisitions of venture-backed companies. While the statistics do not include purchases of non-venture-backed companies they are nonetheless indicative of broad market trends.

In 2009, Google acquired just three venture-backed companies, while Oracle led the way with five such purchases.

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