It seems that $1 billion plus change these days is what’s required to buy a photo-sharing app (if you’re Facebook), a global phone manufacturer (if you’re Google) or a microblogging site (if you happen to be Yahoo).
Beyond the jaw-dropping numbers that are casually bandied around for these acquisitions lies a game plan that has every major player struggling to position themselves for relevance and longevity in the semantic web. This ‘new’ web is characterized by two related things: data and connectivity and these happen to be the exact same building blocks out of which web verticals are created.
Despite its diminished stature in search Yahoo continues to be a major web player and Marisa Mayer, its CEO, knows that if the company is ever to regain its past glory it has to redefine itself in the semantic web. To do that it needs data and connectivity, two things which its tiny share of the search market cannot give it. To compensate Yahoo is willing to put down some cold, hard cash for Tumblr. A website that alongside Stumbleupon has been responsible for driving traffic to a sizeable portion of sites on the web.
Tumblr’s popularity has transformed it as the portal of choice for many of the web’s best publications Wired, and Fast Company, amongst them and the vast selection of material that is re-shared through its servers means that Tumblr is sitting pretty upon a pile of data which, should it be mined properly, can deliver some pretty convincing semantic connections to its owner.
Why is any of this important at all? Because the semantic web is transforming not just the way search works but the way every available service on it will work in future. From apps that will guess what you want to do (like Google Now does) to services that will become available, the focus is on “smart”, “predictive” and “service-oriented” technologies. In other words, the web is changing from a place we went to in order to find something we needed to the source of information that’ll power all the tools we use, in the near future.
Facebook knows that and its Graph Search is part of its repositioning to take advantage of the mountain of data it’s sitting on. Microsoft knows that and over the past few months has plonked down undisclosed sums of money to buy Netbreeze, a social analytics company, MetricsHub, a cloud monitoring service and the home automation company called id8 Group R2 Studios. Google knows that which is why it spent over $291 million collectively in the first quarter of this year to buy five different companies, amongst them natural language processing leader, Wavii and social prediction specialists, Behavio.
Yahoo also knows what it has to do. The thing is that perception of its capabilities is restricting its options. Tumblr is a brave acquisition that right now makes a lot of sense for its founder, David Karp, and offers Yahoo a chance to use the data that comes with the deal to play catch-up. Should it stumble it will relegate itself forever to being a bit player in a semantic web that is now being carved up amongst those who have the ability to acquire data through their own efforts and the money to buy the companies that allow them to make better sense of it.