Google: Little Chance Today's Startups Become Tomorrow's Giants

Iain Morris

DUBLIN -- IoT World 2016 -- A senior executive from Google has acknowledged that today's crop of technology startups stand far less chance than Google ever did of developing into large businesses in their own right.

Dvir Yuval, the head of EMEA online partnerships for Google Cloud, reckons today's startups are far likelier to be swallowed up by technology giants than when Google was in its infancy.

"When it comes to the big technology companies, I don't see another coming up to that size soon -- I think big technology companies will buy them before that happens," said Yuval during a presentation at this week's IoT World 2016 conference in Dublin. "It was easier to scale a startup before and for companies to take advantage of that."

Since being founded in September 1998, Google (Nasdaq: GOOG) has grown into one of the world's biggest companies in terms of market capitalization. In October, it ranked second globally, just behind iPhone maker Apple Inc. (Nasdaq: AAPL), and is currently worth as much as $533 billion on the Nasdaq.

But the growing might of Google and other technology businesses has triggered concern at a number of levels. Consumer watchdogs and privacy advocates worry that Google, Facebook and other "big data" giants could exploit the information they hold about consumers in unscrupulous ways.

Aggravating that concern is the fact that technology giants have become more powerful in relation to other sectors of the economy. In October -- when Apple and Google were the world's two biggest companies by market capitalization -- Microsoft Corp. (Nasdaq: MSFT), Inc. (Nasdaq: AMZN) and Facebook occupied the third, fourth and fifth spots in rankings.

Others fear the dominance of these players is already having an adverse impact on competition and innovation in the technology sector. All of the aforementioned companies have the resources to acquire challengers before they can become a serious threat.

Perhaps the highest-profile example of that happening was Facebook's $19 billion takeover of instant-messaging player WhatsApp in early 2014.

There is also a growing sense that Google and its ilk view the Silicon Valley startup community as a kind of unofficial R&D resource. Startups are allowed to innovate and experiment, under the watchful eye of Google or Facebook, until they are eventually snapped up, sometimes for eye-watering sums.

Google itself has announced as many as 14 acquisitions this year, including the $625 million takeover of analytics specialist Apigee Corp. in September.

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Yuval defends the approach, given the difficulties for startups of growing on a standalone basis, and indicates there is little pushback from within the startup community.

"There is a limit to how much you can grow organically and getting acquired may be the best strategy," he says. "I've yet to see founders say no to acquisition."

As the takeover of Apigee attests, Google has become increasingly interested in companies that have analytics and machine-learning capabilities it could put to use in future.

In a troubling development for those worried that artificial intelligence (AI) could eventually supplant mankind, an AI system developed by Google recently defeated a South Korean expert at Go, a complex board game that originated in China.

Intriguingly, says Yuval, other Go experts were flummoxed by some of the moves that Google's AlphaGo system made. "They seemed to make no sense but ultimately allowed AlphaGo to win," he says.

Yuval reckons such experiences show that AI and machine-learning systems can be surprisingly creative, which may cause further anxiety for those alarmed at the progress these technologies are making.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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11/22/2016 | 3:00:50 PM
Those who cannot remember the past are condemned to repeat it.

I suspect many of these companies once thought they were as invulnerable as Google.
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