Why do search engines and search products get acquired?

I was recently asked if the valuation of a search engine acquisition is connected to its number of users. I’m not an M & A expert, but my answer would be that search technologies are almost never bought for customer acquisition.

I made a list of Search Engines that were Acquired, 2016-2018. Take a look at that list and see if you agree with me on the following:

Not a single one of those acquisitions were made to acquire users.

All of them were acquired for their technology, intellectual property, or a team acquihire. This could be due to the following reasons:

  1. The list of search engines that have a critical mass of users is very small. So unless Google buys Bing, we won’t see many large scale acquisitions done for the user base.
  2. There is not much value in acquiring users through a search engine acquisition.
  3. Some acquisitions, like Elastic buying Swiftype, are made to acquire B2B customers (I’m just guessing on this specific example. Possibly the acquisition was made for reasons #1 or #2 above and not for customer acquisition.)
  4. Most search related acquisitions are done to accelerate an initiative by quickly plugging in an existing technology and/or team that’s already been working on a specific problem, rather than starting from scratch. It also removes potential competition.
  5. Similar to #4, some acquisitions are specifically acquihires, like Bing buying Powerset’s impressive employee base in 2008 for “roughly $100 million”. Suddenly Microsoft got a jolt of search and NLP engineers.
  6. The buddy acquisition – there seems to be a cycle of people leaving big companies, like Google, to venture out on their startup dream. Then Google swoops in and buys the startup. (See Aardvark’s acquisition in 2010 for $50 million.)

The takeaway, if you agree with this list and are building search, is to focus on something very technically focused or innovative, rather than worrying about getting users.

Agree? Disagree?

1 thought on “Why do search engines and search products get acquired?

Comments are closed.