The Big Five: Largest Acquisitions by Tech Company

by visualcapitalist

Big Tech Company Acquisitions

The Big Five tech giants, or “FAAMG”—Facebook, Amazon, Apple, Microsoft, and Google (Alphabet)—have a combined market capitalization of over $4 trillion.

These powerful tech behemoths often devour the talent, technology, or entire businesses of aspiring competitors. Given their financial weight, mergers and acquisitions have become a key tactic in maintaining their strong grip on tech supremacy.

Today’s Chart of the Week explores the world’s most powerful tech companies and their biggest acquisitions to date.

Which Acquisitions Were a Success?

While these tech giants may have had big aspirations for these exceedingly large deals, they have mixed success rates.

Microsoft

Microsoft made its big move 2016 to buy LinkedIn for $26.2 billion, and it’s the most sizable acquisition by any of the Big Five tech companies.

Microsoft’s 5 Biggest Acquisitions:

Acquisition (Year) Amount Category
LinkedIn (2016) $26.2 billion Social Media
Skype (2011) $8.5 billion Telecommunications
GitHub (2018) $7.5 billion Software
Nokia (2014) $7.2 billion Telecommunications
aQuantive (2007) $6.3 billion Marketing

The LinkedIn deal was made due to the synergy between the two companies’ offerings, and Microsoft’s desire to gain access to LinkedIn’s 575 million members.

However, not all of Microsoft’s acquisitions have been as successful, such as its 2014 purchase of Nokia’s Devices & Services business for $7.2 billion. This seemed like a smart move at the time, considering the Finnish company held 41% of the global handset market.

Yet, Microsoft sold the asset for a mere $350 million just two years later. Microsoft shifted its strategy and exited the feature phone market, choosing to focus on a narrow, niche market for their hardware.

Amazon

Amazon has closed more than $20 billion in acquisitions and investments since 2017. This includes the purchase of Whole Foods, which Amazon bought for $13.7 billion, and is the company’s largest acquisition to date.

Amazon’s 5 Biggest Acquisitions:

Acquisition (Year) Amount Category
Whole Foods (2017) $13.7 billion Retail
Zappos (2009) $1.2 billion Retail
Ring (2018) $1.2 billion Technology
PillPack (2018) $1 billion Pharmaceuticals
Twitch (2014) $970 million Social Media

From purchases to bolster the AI of smart assistant Alexa, to Wi-Fi enabled doorbell Ring, recent additions clearly show the company intends to cement its presence in people’s homes.

After acquiring Whole Foods, Amazon began offering store discounts to Prime customers, in an attempt to bundle its home offerings and provide a more holistic customer experience.

Alphabet

Alphabet has made several daring moves into the hardware and data science sectors. The company’s biggest acquisition was Motorola, which it bought in 2012 for $12.5 billion.

Alphabet’s 5 Biggest Acquisitions:

Acquisition (Year) Amount Category
Motorola (2012) $12.5 billion Telecommunications
Nest (2014) $3.2 billion Technology
DoubleClick (2007) $3.1 billion Marketing
Looker (2019) $2.6 billion Software
YouTube (2006) $1.7 billion Social Media

However, the purchase of Motorola was a bet that didn’t pay off. Alphabet sold off much of Motorola’s assets for less than $3 billion in 2014, a little less than two years after it had originally acquired it.

Alphabet continues to consolidate its acquisitions in order to simplify its organizational structure. DoubleClick, acquired in 2007, merged with Google Analytics 360 Suite under the Google Marketing Platform—making it easier for marketers to access their metrics using one platform.

Apple

Out of the Big Five companies, Apple has the fewest acquisitions over $1 billion. Its largest purchase was for Beats Electronics, which it acquired for $3 billion in 2014.

Apple’s 5 Biggest Acquisitions

Acquisition (Year) Amount Category
Beats (2014) $3 billion Music
Dialog Semiconductor (2018) $600 million Manufacturing
Anobit (2011) $500 million Manufacturing
Shazam (2017) $400 million Music
NeXT Computer (1996) $400 million Technology

Apple’s increasing music streaming efforts have been evident, with the acquisition of Shazam three years after it purchased Beats Electronics.

In an intriguing recent turn of events, Apple recently announced it will acquire the majority of Intel’s smartphone modem business. This $1 billion deal will allow Apple to build all of its devices in-house, and better prepare the iPhone for the upcoming 5G push.

Facebook

Facebook’s largest acquisition has been WhatsApp Messenger, which it purchased for $22 billionin 2014. The WhatsApp acquisition is the second largest of the Big Five, following Microsoft’s LinkedIn purchase.

Facebook’s 5 Biggest Acquisitions:

Acquisition (Year) Amount Category
WhatsApp (2014) $22 billion Social Media
Oculus (2014) $2 billion Technology
Instagram (2012) $1 billion Social Media
LiveRail (2014) $500 million Marketing
Onavo (2013) $200 million Analytics

Aside from absorbing any competitors who encroach on Facebook’s turf—such as WhatsApp and Instagram—Facebook’s takeovers have been aimed at venturing into uncharted territory. The acquisition of virtual reality manufacturer, Oculus, is evidence of Facebook’s bet on virtual reality as the future of engagement.

“After games, we’re going to make Oculus a platform for many other experiences. Imagine enjoying a court side seat at a game, or studying in a classroom of students and teachers all over the world —just by putting on goggles in your home.”

—Mark Zuckerberg

Predicting the Next Shift

The Big Five are some of the most influential companies in the world today.

Beyond rapidly reshaping the global tech landscape, these acquisitions provide important context on how tech companies consolidate power—and, more importantly, what will fuel their next phase of growth.

 

 

 

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