As Tech Giants Seek To Build AI Smarts, Acquisitions Accelerate

Noting more than twice the amount of activity in the year-ago quarter, a total of 34 artificial intelligence startups were acquired in the first quarter of this year, as revealed by the research firm CB Insights.

Among the companies and firms that have been at the forefront of this activity are those firms that want to make up for lost ground and those tech giants seeking to reinforce their leads in artificial intelligence and they have been the most aggressive buyers. According to CB Insights, followed companies like Apple Inc, Facebook Inc and Intel Corp, respectively, Alphabet Inc’s Google has acquired 11 AI startups since 2012, the most of any firm.

There were no comments from the above mentioned companies about the their acquisition strategies.  The recent purchase of Lattice Data, a startup that specializes in working with unstructured data, was confirmed by a spokesman for Apple, the media said.

As Ford Motor Co invested $1 billion in Argo AI, founded by former executives on self-driving teams at Google and Uber Technologies Inc., the first quarter also saw one of the largest deals to date.

Industry observers say that rather than competing directly with the established companies, the most recent of the startups are looking to go deep on applications of artificial intelligence to specific fields, such as health and retail.

“What you will see is very big players will build platform services, and startup communities will migrate more to applied intelligent apps,” said Matt McIlwain, managing director of Madrona Venture Group.

Artificial intelligence is being used to crunch data that can inform doctors’ recommendations by Healthcare startup Forward, for example.

“For people who really want to focus on core AI problems, it makes a lot of sense to be in bigger companies,” said Forward Chief Executive Officer Adrian Aoun, who previously worked at Google. “But for folks who really want to prove a new field, a new area, it makes more sense to be separate.”

Matthew Zeiler, chief executive of Clarifai, which specializes in image and video recognition, said that artificial intelligence companies that do remain independent field a steady stream of suitors. He said that since starting the company in late 2013, he has been approached about a dozen times by prospective acquirers to take over the company.

The narrow focus on artificial intelligence bolsters Clarifai’s pitch to customers such as consumer goods company Unilever Plc and hotel search firm Trivago.

“(Google) literally competes with almost every company on the planet,” Zeiler said. “Are you going to trust them with being your partner for AI?”

In recent times, academics specializing in artificial intelligence have been at the center of a bidding war as the tech giants have been locked in a fight to get such academics. Vic Gundotra, chief executive of AliveCor, which makes an AI-driven portable heart monitor, said that a company with a specialized mission can win over recruits even though startups rarely have the capital to compete with established companies.

“They say, ‘I want to come here and work on a project that might save my mother’s life,’” Gundotra said.

(Adapted from Reuters)

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