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Google to purchase Looker to expand cloud services

UNDER SCRUTINY:Regulators are likely to look closely at any deal made by Google, as the firm is facing a US Department of Justice antitrust investigation

Bloomberg

Alphabet Inc’s Google agreed to buy Looker Data Sciences Inc for US$2.6 billion, expanding its offerings to help customers manage data in the cloud.

The acquisition, announced on Thursday, gives Google a new tool in its campaign to sell more cloud storage and software.

So far, the company has struggled to compete with larger rivals Amazon.com Inc and Microsoft Corp, and late last year, Google replaced its head of cloud Diane Greene with longtime Oracle Corp executive Thomas Kurian.

Looker, based in Santa Cruz, California, helps companies visualize and analyze the data they store in the cloud.

The deal is Google’s biggest since it acquired smart-home company Nest Labs for US$3.2 billion in 2014, according to data compiled by Bloomberg.

Any dealmaking by Google now is likely to be given a close look by regulators, as the company is facing an antitrust investigation by the US Department of Justice.

However, analysts’ initial reaction is that the anticompetitive threat is not high in this domain.

“I think it will get scrutiny, because these are complicated businesses and there is so much sensitivity around small acquisitions by the big tech companies,” Bloomberg Intelligence analyst Jennifer Rie said.

However, Rie said she does not think that owning Looker would “disadvantage any other competitors or have any real potential for harm.”

“I do think the regulators will take a close look, however,” she said.

The cloud is important for Google, because growth is slowing in its core search advertising business.

Google already has analytics tools, but the company noticed that many of its customers were also using Looker, Kurian said.

“Looker complemented the Google Cloud analytics foundation,” he said.

Google does not plan to cut off Looker from working with its competitors, because many of its customers use more than one cloud, Kurian said.

Working with other cloud systems is a critical part of Google’s overall strategy, he said.

Kurian has been concentrating on hiring new sales people and refocusing Google’s cloud efforts on several key industries.

Investors and analysts have repeatedly asked when the company planned to do a major acquisition to boost its presence in the space.

“Many people have asked us for many months: ‘Are you rushing to do acquisitions?’” Kurian said. “We’ve been very disciplined in building our sales, go-to-market capability and our own products. We’ve chosen Looker as a very complimentary technology that a lot of customers will find value in very quickly.”

The two companies already share more than 350 joint customers, including BuzzFeed, Hearst, King, Sunrun, WPP Essence and Yahoo!

The acquisition of Looker is expected to be completed later this year, subject to regulatory approval.

Google probably realizes that it is under the microscope on any merger and acquisition deals, but the Looker purchase seems to be a “vertical merger,” which are harder for antitrust authorities to block, said Charlotte Slaiman, policy counsel for consumer advocacy group Public Knowledge.

However, “there still might be real concerns,” she said.

Looker chief executive officer Frank Bien is to stay on at Google and report to Kurian.

Bien has a long history building successful cloud start-ups and has sold some of them to companies including VMware Inc and EMC Corp.

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