2017 was good for AI sector, but what will the cards hold for 2018?
2017 was definitely the year of Artificial Intelligence (AI). With plenty of breakthroughs like Google’s AlphaGo Zero making headlines, the year also provided a launchpad for several AI startups to establish themselves in the new tech sphere. What’s interesting is that around 47 percent of the AI startups established in the last five years have managed to land venture capital backing. Startups in the AI field have been in the thick of acquisition rumours as well, as previous M&A deals have shown great value for both VCs and the companies that acquired them.
As interest builds for AI, major tech giants of the likes of Google, IBM, Apple, and Facebook have been scurrying to get a chunk of the pie. In the last five years itself, more than 250 private startups using AI algorithms were acquired, and more than 40 of these deals were struck in the first quarter of 2017. But it wasn’t just tech companies that were breaking the bank for AI initiatives. One of the most talked about deals was Ford’s acquisition of Argo AI for $1 billion in February 2017. This goes to show that interest in AI is not limited to technology companies. Keeping course with the acquisition of self-driving AI tools, Intel also acquired Israel-based Mobileye for $15.3 billion in the biggest AI M&A deal of 2017.
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Keeping pace with change
Google has been one of the most active players in the AI acquisition space recently, with more than 13 acquisitions in the last four to five years. However, CEO Sundar Pichai hasn’t gone all guns blazing, choosing to adopt a more conservative approach. He doesn’t just want to focus on the speed of adoption, but more on the value that each technology brings to the table: “I recognize that, in the Valley, people are obsessed with the pace of technological change. It’s tough to get that part right. We rush sometimes and can misfire for an average person. As humans, I don’t know whether we want to change that fast – I don’t think we do.”
Recognising the scope of AI early on, Google made major moves as early as 2013 when it picked up the deep learning and neural network AI company DNNresearch. Google also acquired DeepMind in 2014 for more than $650 million, making it a huge acquisition at the time. In 2017, Google acquired the Indian startup Halli Labs to solve legacy-related AI problems and AIMatter to help them process images better.
Turning fiction into reality
Amazon is another company that has been going full steam ahead in the AI acquisitions space. Jeff Bezos believes that AI will permeate all levels of our reality, which is why he wants Amazon to be involved with it at any and all stages. He recently said, “We are now solving problems with machine learning and artificial intelligence that were…in the realm of science fiction for the last several decades. And natural language understanding, machine vision problems, it really is an amazing renaissance.”
Acquiring Blink (a doorbell and IoT AI startup), Body Labs (AI 3D modelling), and Harvest AI (security) in 2017 has allowed Amazon to enter a variety of fields and create value for their shareholders in strategic avenues. Some analysts even predict that the company’s Whole Foods acquisition will offer a major boost in its efforts to introduce more AI-related technologies in offline stores.
Rounding off the AI acquisitions by large firms this year, Apple spent some top dollars to purchase Lattice Data (for $200 million), a company which works with the restructuring of big data. Earlier in the year, it also purchased Israel-based RealFace for $2 million. The startup offers a frictionless facial recognition system that the tech giant embedded in the latest iterations of its flagship iPhone device.
What will 2018 hold?
With expectations about the future of AI soaring, 2018 could also be a watershed moment for other associated technology, such as big data, machine learning, blockchain, etc. Cross-functionality and linkages between these sectors will likely become more common as AI makes its presence felt in a variety of sectors, including in our everyday lives.
As we resolve the moral and ethical dilemmas posed by increasingly sentient AI, the sector will continue to be a lucrative space which offers opportunities and development in the future. Expect more startups to come forward and push the limits of the tech, in turn driving even greater interest for more acquisitions by the world’s leading tech players.