Without the help of acquisitions, Google’s goal of “becoming the second largest cloud service provider” may be difficult to achieve.
According to foreign media “Business Insider”, Google has a potential intention to acquire Salesforce, the largest CRM cloud service provider in the United States, with a purchase price of up to 250 billion US dollars. If the acquisition comes true, Google is expected to become the world’s second largest cloud service provider in 2023.
In August 2019, Google Cloud CEO Thomas Kurian told employees that the company hopes to become the second largest cloud service provider in five years. However, some analysts believe that this goal is difficult to achieve with business growth.
According to the “Business Insider” report, Google may achieve this through the acquisition of Salesforce, and will immediately become the second largest cloud service provider after the acquisition. But the price is that the $ 250 billion acquired is a 70% premium to Salesforce, which is twice the Alphabet’s 2018 revenue. Google needs to borrow to complete the acquisition.
RBC Capital Markets revealed the news to Business Insider. According to its analysis, Google may also split its cloud business into a US $ 226 billion independent company to deal with the risks of antitrust review.
Some analysts said that since Kurian came to power in February 2019, he has tended to make bulk acquisitions to expand his share. In the past two years, Google has invested heavily in cloud computing, acquiring data analysis company Looker and cloud storage service Elastifile.
In the future, Kurian may continue to direct a series of acquisitions, including human resources company Workday, network security provider Palo Alto Networks, cloud software company ServiceNow, and data analysis company Splunk.
As for Salesforce, this 20-year-old company mainly provides cloud CRM (customer relationship management) services, and maintains an absolute advantage in this market with 19.5% share, which is more than double the second-ranked SAP. To date, Salesforce has maintained 20% annual growth.Some analysts said that this growth ability and customer base matching the service are the key to attract Google.
Forbes also issued a sharp criticism of this acquisition, arguing that Salesforce’s appeal to customers is to build cloud CRM services, not cloud infrastructure. After Google Cloud’s acquisition of Salesforce, the growth of the cloud service itself may exceed the growth of CRM, thereby destroying its appeal to customers. “The value of the team lies in the fan base, and the fans follow the players. If the player’s popularity fades, its fans will gradually disappear.
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