Google has revealed it would buy Looker, a privately held big-data analytics company, for US$2.6 billion in cash, in the first major acquisition for new Google Cloud chief executive Thomas Kurian.
Google's cloud computing division is a distant third globally to Amazon Web Services and Microsoft in terms of revenue from renting infrastructure and other computing tools to businesses.
But Google Cloud's BigQuery, a tool for managing large datasets, has been among bright spots in attracting customers, according to cloud industry analysts.
Kurian told Reuters in an interview that doubling down on analytics made sense as he looked to fill gaps in his unit. Looker and Google Cloud have similar cultures and share more than 350 customers including Blue Apron Holdings, and Hearst Communications, he said.
"When we looked at how do we broaden our portfolio, [data and analytics] is a segment where we have strength," Kurian said. "Looker is complementary and completes our analytics foundation."
The deal also reflects Kurian's plan to win customers with specialised software, as rivals focus on more general tools.
Santa Cruz, California-based Looker, which was founded in 2012, employs about 800 people, has raised US$281 million in venture capital and was valued at US$1.6 billion in a funding round last year.
Its tool enables analysts and other workers to define calculations for items such as revenue or high-value customers and then visualise trends in their data without writing complicated scripts. It competes with Tableau Software Inc , Domo Inc and Microsoft's Power BI.
Tableau shares fell 3.7 per cent, and Domo dropped 0.4 per cent. Microsoft rose 1.6 per cent, and Alphabet increased 0.3 per cent.
Analysts said Looker is among the best business intelligence tools developed in the cloud era and that it would benefit from Google's resources. Equity research firm Cowen estimated Looker's 2019 revenue would be about US$140 million.
Kurian said integrating Looker would result in new features, without elaborating.
Boris Evelson, who follows data analytics for Forrester Research, called buying Looker "a smart choice."
Looker Chief Executive Frank Bien is expected to stay with Google and report to Kurian.
Kurian, who joined Google last November, said he did not expect the deal to face antitrust scrutiny because the company is buying software, not data, and is committed to allowing the software to connect to Amazon.com and other competing cloud services.
The companies said they expect approval this year for the deal, which is Google's biggest since buying Nest for US$3.2 billion in 2014.
Alphabet's private equity fund CapitalG previously invested in Looker.
(Reporting by Paresh Dave in San Francisco; Additional reporting by Arjun Panchadar in Bengaluru; Editing by Saumyadeb Chakrabarty, Nick Zieminski and Susan Thomas)