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A $2.6B takeover of Looker shows Google’s head is in the cloud

Google has agreed to purchase business intelligence analytics platform provider Looker for $2.6 billion, marking its biggest acquisition in five years.

Google Cloud CEO Thomas Kurian is quickly making a splash just six months into his chief executive role.

On Thursday, the internet search goliath announced it has agreed to purchase Looker, a provider of a business intelligence analytics platform, for $2.6 billion. Final closing of the deal is expected later this year, pending regulatory approval.

This mega-deal is one of Google’s biggest acquisitions to date, and it serves notice that Google’s parent company, Alphabet, is still in the game of 10-figure buyouts, considering its last billion-dollar full acquisition was five years ago. In 2014, it paid $3.2 billion for smart thermostat developer Nest Labs. (Alphabet later purchased HTC‘s design team for $1.1 billion in 2017 but stopped short of acquiring anything further from the smartphone manufacturer.)

The $2.6 billion price tag for Looker is more than 60% higher than its last valuation, which the company reached six months ago. Since it was founded in 2012, the California-based startup has raised more than $280 million in funding from backers including First Round Capital, Kleiner Perkins and Sapphire Ventures. Here’s a look back at Looker’s fundraising journey toward a highly coveted Google buyout.

  • March 2013: $2 million seed round | $16 million valuation
  • August 2013: $16 million Series A | $80 million valuation
  • February 2015: $30 million Series B | $180 million valuation
  • January 2016: $48 million Series C | $400 million valuation
  • February 2017: $81.5 million Series D | $850 million valuation
  • December 2018: $103 million Series E | $1.6 billion valuation

Competition in the cloud

The acquisition is likely a strategic move to compete with Amazon Web Services and Microsoft Azure. According to a February report from tech research firm Canalys, AWS was crowned king by a long shot, capturing 32.3% of global cloud infrastructure market share in 4Q 2018, followed by Microsoft Azure with 16.5%. Google came in third with a comparatively low 9.5% but still ranked ahead of Alibaba Cloud (4.2%) and IBM Cloud (3.6%).

In a larger sense, this multibillion-dollar cloud data acquisition is unsurprising when considering the significance of the cloud in the coming years, according to Amir Orad, CEO of Sisense, a business analytics company that last month made a similar acquisition of data science platform Periscope Data.

“Companies must get on the cloud, or they will die,” Orad told PitchBook. “I know that sounds harsh, but that’s the reality. The future is in data. ... Data is the new oil, and people have fought wars over oil.”

Orad also pointed to Google’s acquisition of Israeli cloud startup Alooma a few months ago as foreshadowing the Looker deal. “In this industry, companies must continue to acquire and grow, or else they will just vanish.”

Particularly advantageous to Looker is its claim of being cloud-agnostic, as its data analytics offerings can connect to a variety of platforms, including Amazon Redshift, Azure and Oracle. When asked about how Google plans to address this involvement with its competitors, Kurian told Bloomberg that it is a non-issue and there are no plans to cut Looker off from working with Google’s competitors, since clients tend to work with multiple cloud services. Integrating this diversity in cloud usage is an essential part of Google’s overall strategy, he said.

With regulatory approval still pending, there may ultimately be questions as to whether the “cloud” that hangs over this deal might not be the technological kind. On May 31, the Wall Street Journal reported on an imminent antitrust investigation from the Department of Justice relating Google’s dominance in search engines, among other business elements. Alphabet’s stock tanked 6.1% on the news, signaling anticipation of material difficulties in the way Google conducts business moving forward. However, given Google’s lack of dominance in the cloud infrastructure industry, it appears unlikely that the Looker deal will be affected.

Featured photo courtesy of Google Cloud

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    Written by Ian Agar

    Ian Agar was a financial writer at PitchBook covering venture capital.

    A native of Southern California, he joined the US Coast Guard and received his BA in Psychology from American Military University. After leaving the military, he was a writer for SeekingAlpha for over six years covering blue-chip stocks and fast-growing small-cap companies. Although studying charts and financial reports excite him, his wife is his real passion in life—especially when they both spend time studying charts and financial reports together.

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