Just as government officials step up their antitrust scrutiny of U.S. tech giants, Google had a surprising announcement Thursday: It was buying another company.
Google said it planned to buy the data analytics company Looker for US$2.6-billion in a bid to catch up to rivals in the business of cloud computing.
The transaction, which is subject to government approval, will be an immediate test for regulators.
“A few years ago, this deal would have been waved through without much scrutiny,” said Paul Gallant, a tech analyst with Cowen who focuses on regulatory issues. “We’re in a different world today, and there might well be some buyer’s remorse from regulators on prior tech deals like this.”
A primary argument against the tech giants’ power is their history of gaining size by acquiring other companies, and some politicians have suggested breaking up corporations such as Google and Facebook.
In recent weeks, the Justice Department and the Federal Trade Commission divvied up antitrust oversight of some of the biggest tech companies, with the Justice Department handling Google and Apple and the FTC handling Facebook and Amazon. House lawmakers have also said they plan to investigate the tech giants’ power and influence.
Looker could bolster Google’s cloud unit, which sells computing power, data storage and data analytics to companies. Founded in 2011, Looker has grown rapidly, now helping more than 1,700 companies understand and analyze their data. The company, based in Santa Cruz, Calif., had raised more than US$280-million in funding, according to venture-tracking site Crunchbase.
Executives at Google Cloud, which has significantly trailed Amazon and Microsoft in the cloud-computing market, hope the deal will make its service more attractive to corporations.
Thomas Kurian, Google Cloud’s chief executive, said the deal did not pose antitrust problems because many similar data-analytics competitors remain on the market, Google’s rivals Amazon and Microsoft have their own similar tools, and Google was not gaining any customer data in the transaction.
“We’re buying a software capability, meaning a business-intelligence tool, and we are not buying any data,” he said.
Google and Looker have a strong argument that they will not be too powerful: Together they would own about 1 per cent of the roughly US$12.7-billion market for business-intelligence tools, according to IDC, a market research firm.
However, antitrust regulators could home in on the possibility that Google will require that Looker no longer work with cloud-computing platforms from Amazon and Microsoft.
Google and Looker rejected that idea on Thursday. “No. Period,” Mr. Kurian said when asked whether Google would make Looker exclusive to Google Cloud. “We will continue to support multiple clouds.”