Some rumours of a Google acquisition last week caused a 17% surge on the stock of content delivery network, Akamai. Now Bloomberg is reporting that the rumours were just speculation – quoting two sources “familiar with the matter”, but the Akamai stock is staying up around 5% meaning the markets aren’t so sure.
The Business Insider article that started the original rumours based the claim on numerous sources and the fact that Akamai stock has slumped 50% over the last year and that Akamai has a wealth of data – especially in video serving – that Google could find useful.
The 50% reduction in price certainly makes Akamai a target for acquisition at the moment, but whether that would be by Google or technology or infrastructure companies like IBM and Verizon are debatable. I doubt IBM would involve itself in the content distribution game, but this could be a way for Verizon to avoid net neutrality by a back-door. If numerous content heavy sites use Akamai to help serve their content, then by owning the CDN Verizon will be charging them for the extra bandwidth. Moreover, Verizon could keep the content locally hosted to their own major nodes, keeping any backbone traffic to a minimum to their own customers. Akamai would be a good fit for a major ISP.
Google would have less to gain from such an acquisition. Yes Google has stated various times that they want to speed up the web, and it is the distribution networks of companies like Akamai that would help do this – but that alone would not be worth the hefty purchase price. The “wealth of data” would also pale in comparison and overlap with much of what Google already stores – again its value would not warrant the $7+ billion of acquisition. Google already has a huge infrastructure – and the costs simply outweigh the benefits at the moment for them.
Apple on the other hand have a lot of cash on hand, and are making that move from hardware designer/manufacturer with music/video/app store on the side – to a full blown cloud focused company with the release of iOS5 and iCloud. They relatively new to the game and could possibly benefit from both the Alamai technology and their talent as Apple begins to sync the content for millions of iPhone and iPad users to the cloud on a daily basis.