Google’s $US12.5 billion purchase of Motorola will be its biggest acquisition ever — more than four times the size of DoubleClick, the previous leader.
But over the last decade, Google has been one of the biggest — and most successful — acquirers in the tech industry, and owes a lot of its success to these smart buys. Its core search advertising platform and most of its biggest new businesses, including Android, YouTube, and display advertising, all come from other companies.
Here’s Google’s top 16 acquisitions by value and show what happened to them.
Last October, Google M&A chief David Lawee called the 2005 acquisition of Android — the mobile phone platform started by ex-Danger leader Andy Rubin — its “best deal ever”. Less than three years after launch, it has become the most popular smartphone platform in the world.
Google paid about $US50 million for social search Q&A service Aardvark in February 2010, but hasn’t really done much with it yet. However, there are hints in Google+ code that suggest that Aardvark — or what’s left of it — will soon be integrated into Google’s new social network.[imgclear]
Google bought this mobile-payment platform in August 2010. Onlookers assumed it would be part of Google’s social networking efforts. In fact, the team was put to work on in-app payments, and earlier this month Google said it would shut down the Jambool Social Gold service in May, and replace it with its own in-app payment system.
Google bought this ad technology company last June, making its 24-year-old founder Nat Turner a young millionaire. Invite is a demand-side platform (DSP), which helps ad buyers place their wares on ad exchanges, and hasn’t yet been integrated into Google’s other ad-buying products. Google recently wrote a blog post explaining when advertisers should use Invite versus the Google Display Network.
In June 2007, Google paid $US100 million for this company, which creates tools for advertisers and users to manage RSS feeds. It’s still around, but RSS has become less interesting in the wake of Twitter — which is now run by former Feedburner founder Dick Costolo.
#11: Like.com visual search, $US100 million+
Google bought this visual search company last summer, and put the team to work building a search vertical for women’s fashion called Boutiques.com.
#9 (tie): Applied Semantics, $US102 million
David Lawee may think Android is Google’s best acquisition, but from a pure ROI perspective it’s hard to beat Applied Semantics, which built AdSense — the paid search advertising platform that’s still responsible for most of Google’s revenue and profits.
#9 (tie): dMarc automated radio ad placement, $US102 million
This one was a mistake: in 2006, Google paid $US102 million for this platform for automatic placement of radio ads, and offered a whopping guarantee of up to $US1.1 billion based on performance. But the business never took off, and Google shut the program down in mid-2009.
#8: On2 video compression, $US133 million
Google tried to buy this video compression company for $US106 million, but its shareholders held out for a higher price and eventually got $US133 million in January 2010. Last year, Google announced it would open-source the VP8 video codec it acquired with On2, and rename it WebM. Google has since tried to push WebM as a replacement for H.264, a much more widely used standard for web video.
Google bought the social gaming company behind SuperPoke last August for $US228 million (the price was originally reported at $US182 million). Slide still operates as a separate entity within Google, and doesn’t seem to be contributing much to Google+, the company’s new social networking initiative. Instead, it’s out there creating standalone mobile products like photo-sharing app Photovine.
#6: Admeld, real-time bidding exchange for online advertising, $US400 million (if regulators let it go through)
Google announced plans to buy Admeld in June to boost its display advertising business. Regulators announced last month that they’re taking a close look at the deal, but that doesn’t mean it will be blocked — regulators also took a second look at ITA and DoubleClick, and both of those deals eventually closed.
Google bought this company in June 2007 and integrated its add-on email services, like spam-blocking and archiving, into Gmail for business users. It’s been a critical part of Google’s enterprise apps business ever since.[imgclear]
Google made a $US700 million bid for ITA, which compiles flight information for airlines, travel agencies — and rival search engines. The bid garnered complaints from competitors who rely on ITA’s service, but the feds eventually approved it with conditions.
#3: AdMob mobile advertising, $US750 million
Android is all about increasing mobile search usage today, but Google hopes to make mobile advertising in general into a huge business. That’s why it paid $US750 million for AdMob in November 2009. Since then, however, AdMob execs have left — including former CEO Omar Hamoui (pictured here) — and sources have said the integration isn’t going so well.
It looks like a no-brainer now, but when Google bought the video-sharing service in 2009, it was a huge risk: YouTube was full of copyrighted content that users uploaded without permission, and faced potentially billions in lawsuits. Google skillfully negotiated contracts with content owners and instituted a reasonable takedown policy, and as a result YouTube has thrived — analysts estimate it’s now profitable and earns more than $US1 billion a year. This year, Google is increasing headcount by 30 per cent and is hiring tons of new ad sales people.
The 2007 acquisition of DoubleClick launched Google into the display advertising business. It’s been a mixed bag. Google boasts that it’s making $US2.5 billion a year from display, but about $US1 billion of that is from YouTube. Also, display advertising isn’t nearly as profitable for Google as its core search advertising business. Still, display advertising is a big business, and Google has to be in it. Buying DoubleClick was a lot faster and easier than building a display business from scratch.
Now, check out what Google will get from its biggest acquisition ever: Here’s Everything Google Just Bought From Motorola For $US12.5 Billion