Here’s Why Google Is Acquiring Apigee

Recently, Alphabet Inc.’s (NASDAQ:GOOG) subsidiary Google announced that it will acquire the API (Application Programming Interface) platform provider Apigee for $625 million in a transaction that is likely to be closed by the end of this year. An increasing number of companies are shifting towards communicating programatically through APIs via the internet, augmenting or even supplanting traditional communications via phones.  For example, physicians these days can communicate prescriptions to pharmacies electronically on a dedicated platform, rather than by phone.   Apigee’s comprehensive API platform works as an enabler for this sort of communication, offering secure, stable, multi-language, dev, test, publish and analytics capabilities. This acquisition is an indication of Google’s increased focus on corporate clients and its enterprise services offerings. According to Google’s management, its corporate customers believe that getting the API strategy functioning is a key step for their business and with Apigee’s strong reputation in this space, the acquisition will strengthen Google’s enterprise offerings. We believe that, as the company tries to develop a competitive edge in the cloud enterprise solutions segment, Apigee’s technology can work as a differentiator, driving Google’s growth in this segment in future.

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Creating A Competitive Edge In The Enterprise Solutions Market

According to a Synergy Research Group report, Amazon Web Services dominates the cloud infrastructure market with a 31% global market share with the next three players viz., Microsoft, IBM and Google jointly accounting for 22% of the market. Google has been a late entrant to this market and does not yet have a significant share in this segment.  Experts at Synergy Research Group believe that the cloud infrastructure market is so large and growing so rapidly that companies witnessing a 10-30% growth per year in this segment might actually be losing market share.  Given the huge potential of this market and Google’s relatively small share , the company now appears to be increasing focus on this market.  With the acquisition of Apigee, it is trying to solve for the most critical aspect of business strategy – application programming interface (API). Google believes that the addition of Apigee’s services to its cloud infrastructure offering will accelerate its customer’s move to supporting their businesses with high quality digital interactions. Apigee has an impressive client list, including Adobe, BBC Worldwide and Walgreens, indicating that notable  companies see value in its platform. According to a report by Accenture, digital disruption has caused a steady erosion of customer loyalty. Consumers continuously evaluate providers and companies must adopt new customer-centric practices to retain customers. These practices include offering an integrated customer experience across digital and analog channels to meet customer preferences. Digital interactions with customers are critical for companies and Google’s efforts to provide an easy solution for incorporating this service can attract more companies to its cloud infrastructure.

We believe that, as Google increases focus on its corporate clients and looks to strengthen its cloud offering, the acquisition of Apigee will provide a boost to these efforts. In the growing cloud market, where an increasing number of companies are looking at programmatic communication, this acquisition should give Google a competitive edge.

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