UPDATED 11:53 EST / SEPTEMBER 08 2016

CLOUD

Google boosts cloud efforts with $625M Apigee acquisition

For the first time since absorbing Motorola Mobility Inc. in 2011, Google is acquiring a publicly traded company, announcing today that it’s buying cloud-based application programming interface management provider Apigee Inc. for $625 million.

It’s a key move in Google’s attempt to build up its cloud computing services versus leaders such as Amazon.com Inc. and Microsoft Corp. APIs allow software developers to build applications using data and services from a variety of programs.

The deal buys the Alphabet Inc. subsidiary one of the industry’s most popular services for controlling application access, an area that is receiving more and more attention as companies seek to better engage the developer community.

“Leading API management platforms, such as Apigee’s, provide for deeper engagement with customers, partners and employees by allowing valuable data trapped inside legacy IT systems to be safely exposed to externally facing applications such as mobile apps,” Morgan Stanley Research analyst Brian Nowak wrote in a Sept. 9 note to clients. “With the shift to an app-driven economy, APIs are playing a central role in business strategy by helping enterprises deliver on key digital transformation initiatives including faster time-to-market, brand extension into new channels, and deeper customer engagement.”

Nowak, whose firm advised Apigee on the sale, said Google gains a “backdoor to managing critical back-end systems” of large customers as well as access to a large developer community. Both should help push adoption of Google’s Cloud Platform, which still trails far behind in the market to Amazon Web Services and Microsoft Azure, he said.

Apigee Edge is used by Ticketmaster to manage its mobile APIs, helps the BBC regulate online content distribution by partners and boasts hundreds of other notable enterprise customers. The vendor has told customers that they can continue their operations as normal until the buyout’s expected completion later this year, at which point they’ll be moved over to Google along with all of its technology assets.

That includes not only Apigee Edge but also the vendor’s complementary API analytics service, security tool and connected device management platform. Then there’s also the Apigee Exchange, where organizations can collaborate to make their services interoperable. Diane Greene (pictured above), the Google senior vice president for enterprise and cloud, wrote in a blog post today that the services will be made part of its public cloud platform to complement its existing managed development automation offerings.

The move could help level the playing field against rival infrastructure-as-a-service platforms such as Amazon Web Services and Microsoft Azure. Both provide native API management services, but they’re not nearly as popular or battle-tested as Apigee’s offerings. Google will no doubt work to keep it that way in the wake of today’s acquisition.

As part of the effort, the search giant plans on integrating its newly acquired API tools with Kubernetes, the homegrown Docker automation framework that it open-sourced in 2014. The move indicates that Google may focus much of its attention on making Apigee more attractive for developers building containerized applications, which are already a core component of its cloud strategy.

But Google’s plans won’t be easy to implement given the fierce competition in the infrastructure-as-a-service market. If recent history is any indication, Amazon and Microsoft will probably start enhancing their API management offerings at an accelerated pace in a response to the deal’s announcements. That should bring some relief to customers who fear that the search giant may discontinue Apigee’s support for AWS and Azure following the deal to improve its position.

At the same time, however, there’s also a good chance that the company will keep things as they are given the fact that so far it has pursued a fairly open cloud strategy.

Photo: Robert Hof/SiliconANGLE

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