Google, Salesforce's billion-dollar acquisitions driven by a need to understand big data

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Top technology firms are gobbling up analytics providers to make it easier for customers to visualize complex data sets, all part of an effort to remain competitive in a crowded field of providers.

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In the past week, Salesforce said it would acquire Tableau Software for $15.7 billion – the largest acquisition in its history – while Google is purchasing Looker for $2.6 billion.

Underpinning the activity, experts say, is partially the dominance of Microsoft’s Azure, the firm’s cloud service that includes sophisticated analytics capabilities as part of its offering.

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The deals are also aimed at creating a more seamless experience for customers that are seeking to independently turn large amounts of data into actionable graphs or charts.

While companies are adept at gathering that information, the technology to easily visualize the raw figures is less developed. New offerings like those from Looker and Tableau simplify the process.

“Enterprise businesses all the way down to small and midsize businesses are looking for ways to capture data, but then once you capture the data, how do you put it to better use,” David Kerr, managing director of Allos Ventures, told FOX Business.

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For firms like Salesforce and Google, that meant looking externally.

“It’s something of an arms race to figure out which are the next innovative companies that they can look to for an acquisition that will move the needle,” Kerr added. 

Google, for example, already offers its own analytics software, but experts say it pales in comparison to Looker's product. And for Salesforce, the acquisition of Tableau is a long time coming. The San Francisco-based company was interested in the business as far back as 2016, according to leaked emails at the time.

Putting pressure on the firms is Microsoft, which has seen a resurgence in its business. In April, it became the third U.S. company to top the $1 trillion valuation mark, behind Apple and Amazon.

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On top of cloud computing, for example, Microsoft's purchase of LinkedIn in 2016 presented a new challenge to Salesforce’s core business. And the Azure platform comes with its own data analytics offerings that have challenged the growth of Tableau and Looker.

“Microsoft has become a one-stop shop on everything from cloud computing, to applications, to office tools, to analytics,” said Tom Roderick, managing director at Stifel Nicolaus.

Acquiring the analytics firms allow Google and Salesforce to “effectively operationalize all the data they already have on their applications” instead of requiring that the information be sent to different vendors to visualize, Roderick added.

While experts say its unlikely competitors like Oracle and SAP pursue deals as large as Salesforce and Google are, there are a number of firms whose offerings could present a prime acquisition opportunity, like Atlassian, Smartsheet and DocuSign. On the analytics front, Tableau and Looker were the industry frontrunners but ThoughtSpot and ClickSoftware are also possible targets. 

And while Slack is pursuing its own initial public offering, the company’s aim to end reliance on email could soon make it a necessary tool for businesses.

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For companies, the consolidation presents a difficult choice of which provider to go with. Chris Byers, CEO of Formstack, uses both Tableau and Looker but said his firm is more heavily adopting the latter. 

Still, switching between providers is not the technical challenge it once was, putting the onus on the tech companies to seamlessly integrate the new acquisitions into their existing businesses.

“It's so easy today to adopt the next piece of software and that next piece of software likely already connects to my core system," Byers said. "If it's not tightly integrated and if it's not well-positioned, it's easy to go pick the next software."