Why Google Would Drop $2.6 Billion on an Analytics Company

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Despite rumors of a pending Department of Justice antitrust investigation, Google continues to expand. Today the company’s cloud computing division announced that it will pay $2.6 billion for the business intelligence/analytics company Looker. It’s the first big purchase made by new Google Cloud CEO Thomas Kurian, who joined the company from Oracle in November.

It might seem odd that Google, the world’s biggest data cruncher, needs to buy a business data analysis product. But IDC analyst Dan Vesset says Looker fills a hole in Google’s current portfolio. Google’s own public-facing analytics tools are either developer-focused offerings, like its cloud-based artificial intelligence tools, or specialized tools like Google Analytics, which is for analyzing web traffic. It also has a few database management tools and storage services. “But Google didn’t really have a front-end tool that lets business analysts slice and dice data,” Vesset says-at least not one that was useful for large organizations. In that sense, Looker doesn’t compete with Google’s existing services, but rather with products from companies like Oracle, SAP, Microsoft, and IBM. Amazon, the largest provider of cloud computing services, has its own business intelligence service called QuickSight.

What sets Looker apart, says Forrester analyst Boris Evelson, is that, unlike older business intelligence products, Looker’s products are built to take advantage of newer, more robust data storage platforms, such as Google’s BigQuery system. That frees it up to focus on other important components such as modern user interfaces. Vesset says business intelligence software is a $12.7 billion market that IDC expects to continue growing. “Now with the influx of Google resources, I’d expect Looker to rank even higher among the competition,” Evelson says.

Google could have built its own business intelligence service, but acquiring Looker is a faster way to tap into the market. “Google is very well known in the consumer space, but it’s doesn’t have as much presence in large enterprises,” Evelson says. “Looker’s sweet spot is large enterprises.”

As big as Google is, it still wants to be bigger.

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