Artificial intelligence is quickly becoming an integral part of every tech company’s strategy, so it’s no surprise that big firms are ramping up their acquisition of AI startups.
M&A activity has already seen a fivefold increase in the number of AI startup acquisitions — from 22 in 2013 to 115 in 2017. While the race is far from over, Google and Apple have acquired the most AI startups since 2012.
With close to 14 acquisitions, Google is currently leading the charge to buy AI startups. The company’s most recent acquisition involves the conversational commerce platform Banter, which helps businesses connect with their customers over popular messaging platforms like Facebook Messenger, Twitter, and Snapchat.
In 2017, Google purchased Halli Labs and Kaggle for undisclosed sums. Halli Labs is an Indian AI startup with a focus on building deep learning and machine learning systems to address what it describes as “old problems.” Data science startup Kaggle is a service connecting a growing number of data scientists and machine learning enthusiasts to create the most accurate predictive models and market models.
Last year, under undisclosed terms, Google also acquired Belarus-based AIMatter. AIMatter built both a neural network-based AI platform and a software development kit (SDK) for detecting and processing images. Under its wing is Fabby, AIMatter’s photo and video editing app that allows users to take creative selfies and is considered “distinct from recently trendy style transfer’.”
Google’s search for AI startups is nothing new
Since 2012, Google has been looking to acquire top innovative AI startups with promising futures. In 2013, Google picked up deep learning and neural network startup DNNresearch from the computer science department at the University of Toronto to make major upgrades to its image search feature. In 2014, the search giant acquired British learning algorithm startup, DeepMind Technologies, for a total of $500 million. The company later rebranded it to Google DeepMind. Google’s DeepMind program AlphaGo was able to defeat a human world champion in the board game Go. In 2016, Google’s acquisition of natural language processing startup API.ai powered several of Google Assistant’s capabilities.
Apple gives Google a run for its money
Google’s closest competitor in the AI race is Apple. Through its acquisition of Siri in 2010, Apple popularized AI assistants and became one of the earliest players in the AI space. But Apple’s M&A activity slowed down for several years after the Siri acquisition. In fact, some have even accused Apple of “struggling in AI.” The problem may be tied to the company’s strong stance on privacy. Unlike Google and Facebook, Apple does not build user profiles. To unleash the full power of AI and improve existing offerings, data collection becomes crucial. Apple’s strong privacy protections present a problem as the company attempts to build core AI-driven solutions.
Although Apple is selective and secretive with its acquisitions, it remains in a tight race with Google. With 13 acquisitions under its belt, Apple most recently nabbed Pop Up Archive. Prior to its acquisition, Pop Up Archive developed tools to search and organize audio files, using machine learning to convert speech to text and crowdsourcing the task of fixing transcription errors. In 2017, Apple acquired quite a few AI startups, including RealFace for $2 million, Lattice for $200 million, and SensoMotoric Instruments and Regaind for undisclosed sums.
Lattice focuses on translating “dark data” into structured data using AI. RealFace is an Israeli AI firm innovating user authentication with the world’s leading face recognition technology. Germany-based SensoMotoric Instruments makes eye-tracking technology that could prove crucial to Apple’s virtual and augmented reality ventures. In the past, SensoMotoric worked with Facebook’s Oculus Rift VR kit. Apple also acquired a French computer vision tech startup, Regaind, which analyzes the content of photos and makes searching and sorting photos easier through machine learning. Besides acquiring innovative AI startups, Apple also acqui-hired Init.ai’s team to work on its Siri personal assistant.
A rising demand for AI-driven solutions and a growing need for big data has created an extraordinary appetite for AI startups across all industries.
Collectively, the 10 largest tech companies have acquired over 50 AI startups. With established corporations facing an acute shortage of AI talent, the skills gap remains a significant barrier to AI adoption. The race for AI will only get tighter and stronger.
Deena Zaidi is a Seattle-based contributor for financial websites like TheStreet, Seeking Alpha, Truthout, Economy Watch, and icrunchdata.
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