ACQUISITIONS

Google has always been known for acquiring companies with an appetite for technology and has

helped them grow further. The philosophy used by Google CEO Larry Page to acquire a

company is known as the toothbrush Test. He'll ask, "Is this something you will use once or

twice a day, and does it make your life better?" If the answer is yes then he would go ahead and

make plans for acquiring the company which manufactures such products.

Given below are few salient features of Google’s Acquisitions.

The three major components which drive Google’s Strategy for Acquisitions are mentioned

below

1. Patents – Motorola Acquisition

2. Innovation – Boston Dynamics Acquisition

3. Intellectual Property – Motorola Acquisition

Companie

s

Google since its inception has acquired 170 companies

Revenue

Google has spent a whopping 28 million dollars since 2001 on acquisitions

Competitors

Google has outspent its 5 closest rivals in acquisitions the last two years prior to January 2014

Products

Google products originated as services provided by companies that Google has since acquired

The Infographic below shows the Key Acquisitions of Google along with the Strategy involved in each.

2011

Motorola $ 12.5 Billion

The major motivation behind Google buy Motorola was its Patents. After two years the sold it to Lenovo at $ 2.91 Billion. Although they did manage to keep majority of the patents.

NestLabs $ 3.2 Billion

To expand its presence in consumer homes Google bought NestLabs a company which makes smart thermostats and smoke detectors. NestLabs was found by Tony Fadwell who is known as the father of Ipod.

2014

DoubleClick $ 3.1 BillionGoogle wanted a strong presence within online advertising which promoted them to acquire DoubleClick. In addition to acquiring the software they also acquired relationships with web publishers, advertisers and agencies.

2007

YouTube which was launched in 2005 became a go to place for everything related to Video sharing. Google acquired the company just after a year of its launch and transformed it into the second largest search engine in the world only behind Google itself.

YouTube $ 1.65 Billion

2006

Waze $ 966 Million

Waze is a GPS based navigation app. Its users engage very frequently with the app by updating the roads a culture which Google would like to adopt into their major service. 2013

Admob $ 750 Million

Prior to this deal internet usage on mobile phones was growing rapidly. Google reacted quickly to acquire a mobile add platform, understanding that mobile advertising was going to become very big for clients and partners

2009

SEMI ORGANIC GROWTH

Google has focused mostly on a Semi Organic Growth Strategy. It means that Google acquires

an external team/company (inorganic growth) and then skillfully attaches that team to a

specific internal product area (organic growth) to accelerate the growth of that product. Such a

strategy has worked wonders for them as they have been able to acquire companies with new

technology and grow them organically.

Google has majorly followed the acqui-hire approach which has been imprinted in the minds of

Google's senior management .It is a form of corporate development that set the stage for many

ITA Software $ 700 Million

ITA was a major stakeholder in travel reservation software industry. Bing travel also relied heavily on it. Google acquired ITA software thus owing infrastructure behind a direct competitor. The service Google flight has launched since.

2010

Skybox Imaging $ 500 Million

With Skybox’s satellite technology Google was able to obtain accurate and up to date imagery for Google Maps

2014

Google's M&A transactions. Listed below are few examples of Google’s most famous inorganic

growth strategy.

1. Applied Semantics - Google bought Applied Semantics, a developer of semantic text

processing and online advertising technology. Applied Semantics' 45-person team

became instrumental in building AdSense, a cornerstone of Google's paid advertising platform.

2. Android - Any Rubin’s Android was just a 22-month-old startup that made "software for cell

phones." Google spent just $50 million on the company. Google's Android is now the most-used

smart-phone operating system in the world.

3. Picasa - Google acquired Picasa, a Pasadena, Calif.-based digital photography company, in a

move aimed at further cementing its relationship with consumers. It complements Google's

ongoing mission to organize the world's information and make it universally accessible and

useful.

4. YouTube - YouTube which was launched in 2005 became a go to place for everything related

to video sharing. Google acquired the company just after a year of its launch and transformed it

into the second largest search engine in the world only behind Google itself.

NEW BUSINESS ENTRY

Makani

Power

Google purchased of Makani Power for $ 30 Million. Since then, Makani has operated out of Google's X Labs to build airbourne wind turbines, which have the potential to be the dominant form of clean energy.

Titan

Aerospac

e

Titan Aerospace is playing a big role in Google’s Project Loon, which strives to bring internet connectivity to those regions without it by beaming broadband from the sky. $60 Million deal

Boston

Dynamic

s

When this project comes to fruition, it could help the company deliver packages, particularly in urban areas, in a similar fashion to Amazon's proposed delivery drones. $ 500 million deal

NEW BUSINESS EXIT

Motorola

Google had purchased Motorola for its patents. It would enable Google to better protect Android

from anti-competitive threats from Microsoft, Apple and other companies. Motorola’s assets

included 17,000 patents. The company also boasted a decent track record in hardware

manufacturing, with early versions of its Droid Smartphone proving a reasonable success. But

two years after acquiring it turned out to be an unprofitable venture. Thus Google Sold Motorola

to Lenovo for $ 2.91 Billion.

The reasons for selling Motorola were

1. Main interest in patents and not mobile manufacturing.

2. Google’s mobile strategy involves putting android into as many mobiles as possible.

3. Google never made much revenue from Motorola.