Observations

Looking at some of the AI-focused acquisitions of the past year, it’s clear that most of the big tech companies have sought to bolster their in-house teams through acqui-hires. This was pretty much true of each of Facebook’s and Apple’s AI acquisitions this year.

In some cases, it wasn’t always obvious whether the AI element of a product was what the acquirers were looking for — in other words, AI may only have been tangentially related to the acquisition. Facebook’s purchase of Ctrl-labs was perhaps more about finding new ways to interface with machines, for example, while Amazon’s Sizmek acquisition may have been chiefly about acquiring an ad server. But machine learning and automation were still a core part of those acquisitions, and certainly contributed to the respective companies’ appeal.

A broad look at the various AI acquisitions throughout 2019 also highlights the average age of the startups. Most were founded between 2013 and 2016, and of the 14 acquired companies we looked at, six were founded in 2015. This suggests that four years may be the sweet spot for scouting AI talent or general engineering talent. It’s just enough time for a startup to get a viable product into the market without becoming so big that it commands an astronomical buying price.

A quick peek across the industry reveals notable AI acquisitions beyond those of the “big 5,” and their founding dates tend to reaffirm this trend. Twitter acquired Fabula AI (founded in 2018), a machine learning startup that helps spot fake news; audio giant Sonos snapped up privacy-focused conversational AI company Snips (2013) for $37.5 million; Tesla nabbed computer vision startup DeepScale (2015) to develop driverless vehicles; VMware bought machine learning acceleration startup Bitfusion (2015); Matterport acquired Arraiy (2016), an AI startup that automates special effects processing in movies; and Intel shelled out $2 billion for AI chip startup Habana Labs (2016).

Even “non-tech” companies got in on the AI acquisition action. Nike, for instance, bought out Celect (2013), a Boston-based predictive analytics platform that helps establish consumer demand. And McDonald’s acquired two AI-focused companies, Dynamic Yield (2011) and Apprente (2017), to bring voice-enabled digital agents to drive-thrus alongside dynamic menus that change based on environmental factors. For several years already, people have proclaimed that every company is now a technology company, and this is certainly evidenced here. However, these acquisitions also lend credence to the notion that all companies will eventually be AI companies.

All of this activity casts some light on AI’s potential reach across sectors — from ecommerce and driverless cars to education and customer service. And acquisitions will continue to play a pivotal role in big tech’s AI strategy — after all, nabbing the brightest brains may be the best way to stay ahead of the curve.