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Big Companies Are Acquiring AI Startups In Droves

Big Companies Are Acquiring AI Startups In Droves

  • In 2020, Facebook, Apple, Microsoft, Amazon and Google acquired a total of 13 AI startups.

Today, AI startups are a prime acquisition target for companies looking to leverage AI and ML technology, especially in the wake of the pandemic.

Any startup developing an innovative product that grabs market share or creates a niche becomes a target of acquisition. The buyer gets access to the startup’s customers, latest products and portfolio upon acquisition. The majority of promising startups in the AI world are being gobbled up. In 2020, Facebook, Apple, Microsoft, Amazon and Google acquired a total of 13 AI startups. 

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Microsoft

In April this year, Microsoft acquired Nuance for $19.7 billion. Nuance provides speech recognition and conversational AI services and is best known for its deep learning voice transcription service, popular in the health sector.

In July this year, Microsoft Acquired RiskIQ, a global threat intelligence and attack surface management startup to strengthen its cybersecurity capabilities. The acquisition will help Microsoft provide better protection to organisations running applications and infrastructure across hybrid cloud environments. 

Microsoft also acquired ReFirm to enhance its firmware analysis and security capabilities. 

Amazon

AWS acquired Wickr in June 2021. Wickr brings the industry’s most secure and end-to-end encrypted communication technology.

Amazon also acquired Zoox, a self-driving startup to develop autonomous driving technology.

Google

Google has acquired Provino to adopt NoC technologies for running various research work in artificial intelligence and machine learning. Provino develops interconnect protocols to be deployed in next-generation consumer security applications. Google acquired Actifo and the company’s portfolio of data services. The startup’s automated cloning and backup technology complement Google’s cloud strategy.

Apple

Apple acquired Voysis, an Irish AI company. The company develops tech that makes it easier for digital voice assistants to understand a user’s natural language.  In 2020, Apple also acquired Xnor.ai, a Seattle based startup specialising in low power, edge-based AI tools. The startup’s AI-enabled image recognition tools could become standard features in future iPhones and webcams. Apple also bought Vilynx, which has developed AI tech that analyses videos to understand content.

Facebook

In 2020, Facebook acquired Scape Technologies– a cloud-based ‘Visual Positioning Service’ that translates images into 3D maps that deliver precise outdoor locations. It uses computer vision to determine a user’s location beyond GPS capabilities alone. The server-side infrastructure allows ordinary devices to recognise spaces around them and overlay digital items onto the physical world, using machine vision and artificial intelligence. 

AI talent grab

Acquihires are trending up too. Of late, a lot of companies are acquiring startups  for their AI/ML talents. Not just in the tech sector, many companies in other domains are competing for these specialists to innovate and deploy AI in their organisations. Tech giants entering the battleground have only made things more challenging for other companies to attract top tech talent. Companies across sectors are scrambling to secure top AI talent from a pool that’s not growing fast enough.

Source: Deloitte insights

As a result, there is aggressive competition for AI talent, and the bigger companies are ready to go the extra mile to score the right talent. 

AI is a very broad term for various disciplines, including machine learning, natural language processing, image recognition, and so on. These areas require significant mathematical skills and experience (10 years or more) for an individual to spearhead projects. Finding the right professional to lead your company’s AI efforts is no small task, especially considering the weak talent supply side. It makes a lot of business sense for big companies to buy out startups with the right workflow and talent.

See Also

Unsurprisingly, the big tech leads the way when it comes to the acquisition of AI startups. “If big tech companies buy them all up, they eliminate these future competitors and have a chance of actually owning the winners,” said Sean Gourley, chief executive officer of machine-learning startup Primer AI.

The AI models are only as good as the large amounts of high-quality data they are trained on. It is a powerful extension of modern technology where developers play a crucial role in helping AI reach its full potential. However, the acquisition of AI startups kills diversity, and by extension choke innovation. Further, the concentration of the best AI developments in the hands of a select few may lead to increased bias in AI models. 

Frederic Laurin, partnership director at Mila, a prominent Montreal-based deep learning research lab, said at least some of the motivation behind the acquisition of smaller AI firms has to be more than talent hoarding. “The other potential explanation is they see those firms as competitors,” he stated

Part of the inspiration to acquire smaller AI startups can be chalked up to eliminating the “competitors”. Big companies like Microsoft have bought their most threatening potential competitors before they get a chance to gain momentum–a “buy and kill” tactic. For many big companies in other domains, however, buying a startup is simply to leapfrog competitors in the race. 

What’s in it for the startups?

AI startups find it hard to raise capital to scale. Also, the startups that fail to make it see acquisition as an exit strategy. For example, getting acquired by Facebook means the startup will have access to massive datasets for training AI models.

As AI and ML models get more complex, the resources required to train and run these models also become expensive. That said, the right people do not always need huge amounts of resources to create something revolutionary. Just like Sundar Pichai mentioned in an interview in 2017, “You always think there is someone in the Valley, working on something in a garage — something that will be better.”


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