Would Google Ever Acquire Palantir?
Given Google's recent official collaboration with Palantir, many people have been wondering if Google would ever just outright buy Palantir. On the Palantir Weekly Review podcast, we did a 25 minute segment exploring this exact question.
The reason for why people are asking this is obvious. If a gigantic company like Google offers to "collaborate" with a much smaller company, then could they just be learning all about their product to eventually either copy it or offer a strategic buyout to take them off the market?
I don't see this as the case when it comes to the Google/Palantir collaboration for a host of reasons. Let's dive in.
Google Would've Copied Them By Now
If Google wanted to copy a product like Foundry and offer it through their own services, they likely would have done it by now. They have all the money, engineering, and data in the world to figure out how to replicate a similar product and make it kind of good.
In fact, Microsoft already launched their pseudo-Palantir competitor in the business intelligence/data analytics space. Companies like Google aren't ignorant to other technologies being built and have a keen focus on what's actually going on in the market.
The reason I believe we have not seen a pure Google competitor to Palantir but rather a collaboration is because it's not easy to copy Palantir's product.
In face, the AI/ML elements of their product has an 85% failure rate. It's very, very difficult. A sub-par version could be created, but then it would just lessen the brand of the company offering that product since the competitor would always be better.
This is why Google Cloud decided to stick to their core focus: selling compute. The operational workflows that would interpret and analyze data at the most granular levels could be done by Palantir on top of Google Cloud, allowing a meaningful overlap for them to collaborate. Palantir gets more business from GCP clients, Google gets to keep clients happy by offering them first in class solutions on their cloud. Win-Win.
Google's Core Competitors Are Different from Palantir
While Google & Palantir both are tech companies, they both also have fundamentally different business models.
Most of Google's revenue comes from advertising. They sell ads across the internet, monetize search data, make videos discoverable with YouTube, etc.
Palantir is not in the business of selling ads. In fact, they feel advertising is a business that is not the most effective use of a tech company's resources, and have not hesitated to make that clear. As a result, buying Palantir or copying them simply isn't the most effective use of Google's time. Buying Palantir doesn't somehow make their advertising business stronger or more robust, which is what shareholders care about when buying Google stock.
People aren't buying Google for some weird B2B enterprise software, they are buying it because they believe more people will search for things and Google will monetize those searches.
Therefore, Google competes with companies like Facebook, Snapchat, etc. for advertising dollars. Google also offers Google Cloud, which offers cloud computer, and competes with companies like AWS and Microsoft Azure for cloud computing dollars.
Cloud computing and advertising does not compete with Palantir. Palantir actually works on any cloud provider including AWS and Azure because they aren't trying to sell computer, they are selling a data analytics platform that interprets data, not hosts data.
Google just can't be worried enough to buy Palantir since it doesn't make a meaningful dent in their ability to sell ads or sell compute.
Palantir Co-Founders Have F Class Shares
This is the simplest reason this buy out is not happening: Alex Karp and Peter Thiel, cofounders of Palantir, made sure to have F class shares when going public.
What this means is exactly what it sounds like. F class shares basically means "F you."
While I am joking, the F class share structure makes sure that the founders (what the F actually stands for) have the final say around major discissions, including a buyout.
From what we have heard from Alex Karp, he wants to take Palantir to the moon, not back to Palo Alto.
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