How much is an acquisition worth in Big Tech?


Final Projects

Introduction

Amazon, Apple, Facebook, Google, Microsoft. These five technology (tech) companies are now considered more valuable than Disney, Coca-Cola, and McDonalds (Swant, M.). These tech giants show no signs of stopping as each company has also acquired numerous companies and startups along the way, which have assisted in their tremendous growth.

Amazon, for example, has been investing in a wide variety of companies by acquiring startups, such as PillPack, an online pharmacy, and Zoox, an autonomous vehicle company. By acquiring a wide variety of companies, tech companies are able “to offer a range of services across multiple consumer touchpoints” (Handley, L.). By acquiring other companies and expanding their services, tech companies will no longer have to be tied to one product or service and can dominate markets or enter new ones. However, at what price are these tech giants willing to pay to acquire other companies in order to gain a competitive edge?

This project aims to help visualize and introduce some of the major acquisitions taken on by these tech companies. An interactive Tableau dashboard with the disclosed acquisition amounts, years of acquisition, and acquired companies from Amazon, Apple, Facebook, Google, and Microsoft will enable users to explore the variety of acquisitions each tech giant has taken on and examine what these acquisitions might mean for each company’s growth strategy.

Background

An acquisition is defined as “when a company purchases most or all of another company’s shares to gain control of that company. Purchasing more than 50% of a target firms’ stock and other assets allows the acquirer to make decisions about the newly acquired assets without the approval of the company’s shareholders” (Kenton, W.). According to Kenton, acquisitions may be done for a variety of reasons, such as to seek economies of scale, diversification, greater market share, increased synergy, cost reductions, or new niche offerings. Other common reasons to acquire another company include entering a foreign market, implementing growth strategies, reducing excess capacity and decreasing competition, and acquiring new technology (Kenton, W.)

Amazon, Apple, Facebook, Google, and Microsoft have all been making acquisitions for years. These tech giants been making headlines for spending millions, and now billions, of dollars in new acquisitions. Market dominance may be one reason for these billion-dollar acquisitions. However, the increasing value of these startup acquisitions may also signal that these companies are hoping to expand by entering new markets and eliminating competing rivals in the process. By acquiring a wide variety of startups and companies, these tech companies may also be planning to become companies that can do it all, from social media and messaging to payments and transportation.

By creating an interactive Tableau dashboard, this project aims to uncover some insights in these acquisitions and examine what types of startups these tech companies are willing to invest in and for how much. The interactive visualization of major tech acquisitions from 1991-2018 by Marc Doucette of Visual Capitalist served as inspiration for this project:

Visualization by Marc Doucette/Visual Capitalist

For this project, I have decided to retain Google’s company name and will be referencing it as Google rather than its parent organization, Alphabet Inc. For acquisition amounts, I have decided to use only the amounts that were disclosed in order to better assist my analysis on acquisitions made by these five tech companies.

Materials

To visualize the acquisitions of these major tech companies, I decided on using Tableau, an interactive visualization software tool, to create a main graph that users can interact with to see the various companies that have been acquired along with its reported value. The other half of the dashboard would be dedicated to providing the entire list of the collected data, such as the acquisition year, acquired amounts, acquired companies, and industries/businesses of the acquired companies.

To obtain the data, I decided to utilize web scraping methods with the programming language Python to create my own dataset from each company’s Wikipedia page listing its acquisitions. Web scraping “is a technique employed to extract large amounts of data from websites whereby the data is extracted and saved to a local file in your computer or to a database in table (spreadsheet) format” (WebHarvy).

To run my code to obtain the data, I used Jupyter Notebook, an open-source web application used to create and share documents containing live code, equations, visualizations, and narrative text. Once the spreadsheets were collected, I used both Microsoft Excel and OpenRefine to clean, prepare, and combine datasets.

Process

  1. Conduct preliminary research on tech acquisitions.
  2. Scrape Wikipedia pages using Python in Jupyter Notebook to create datasets.
  3. Clean and combine datasets using Microsoft Excel and OpenRefine.
  4. Import dataset into Tableau to conduct analysis and create interactive visualization.

Findings

My preliminary research on tech acquisitions led me to each company’s Wikipedia page listing its entire mergers and acquisitions history. After scraping the web page and cleaning the data, I was left with some missing data, which were either the acquisition value or the acquired company’s industry/business. As both the acquisition value and the acquired company’s industry/business were essential components of my analysis, I decided to only include the acquired companies where an acquisition amount was reported and research any missing industry/business information to fill in the dataset.

To highlight the amount of money these tech giants are willing to spend, I decided to emphasize the value of these acquisitions by using a bubble chart that users could hover over and click on to find out more information. By using a bubble chart, users could also easily discern which acquisition was worth more as it is designated by its size and higher placement on the chart. As many of the lower valued acquisitions clustered on the bottom of the chart and made it difficult to read or click on, I decided that adding another interactive element to my dashboard was needed to gain a complete picture of these acquisitions. By adding a complete list of acquisitions, users can search through or filter by company in order to find out more about other acquisitions.

A major finding from my dashboard was uncovering how much of a presence Microsoft has in the realm of high-valued tech acquisitions, such as its enormous acquisition of LinkedIn for $26 billion, along with its acquisitions of Skype and Github. In contrast, Apple did not have much of a presence on the dashboard as it appeared to mostly make acquisitions within its market and was not as aggressive about expanding or spending as the other tech giants are. The one acquisition that immediately stands out is Amazon’s acquisition of Whole Foods Market, as it the only high-valued acquisition that is not tech-related. The massive Whole Foods acquisition suggests that Amazon wants to expand into other territories and offer services beyond online retailing.

User Research

As this project aims to help visualize and introduce some of the major acquisitions taken on by these tech companies, my main objective when conducting user research was to determine any potential improvements or enhancements on the Tableau dashboard to assist in providing a basic understanding of these acquisitions. My research process included the following steps:

  • Pre-test questionnaire
  • User testing
  • Post-test questionnaire
  • Data analysis
  • Implement recommended changes to dashboard

Research Methods
The method of user research that was selected was a moderated remote usability test. In a moderated remote usability test, the researcher facilitates the test and guides the participant through a series of tasks or questions. Participants are also asked to share their screens while on a video-conferencing tool of choice so that the researcher can also observe the participants’ actions while completing the requested tasks. Participants were encouraged to use the “think-aloud method” and describe their process while completing the tasks and answering questions. Participants were also free to express any thoughts or opinions and ask any questions while completing the tasks.

Pre-test Questionnaire & Participants
A pre-test questionnaire was administered to assist in finding and selecting appropriate research participants. As my dashboard focuses on acquisitions within the tech industry, participants were required to either have knowledge or interest in the topic. This could range from students studying business/finance or similarly related fields to professionals working within related fields. The pre-test questionnaire included the following questions:

  • What is your occupation?
  • Please describe your background, experience or interest in business.
  • Please describe your background, experience or interest in technology.

My two selected participants were the following individuals:

Participant A:
– Recent law school graduate who has experiencing working in business law
– Invests as a hobby but does not spend much time on it
– Interested in technology companies and stays relatively up to date on tech news

Participant B:
– MBA graduate who is trying to start a business
– Invests and is currently researching additional companies to invest in
– Interested in technology companies and tries to keep up with the latest tech gear, software, etc.

Scenario, Tasks, & Post-Test Questionnaire
To evaluate the dashboard’s usability, my two selected participants were presented with a scenario, tasks, and a post-test questionnaire to be completed within 20-30 minutes.

Scenario:
You have an interest in technology companies and have been curious about their acquisitions. You want to know which companies have been acquired by others and for how much. Using the Tableau dashboard:

  1. Explore the graph by filtering companies.
  2. Find the following information from the graph:
    – Which tech company made the largest acquisition and what company did it acquire?
    – What was Amazon’s largest acquisition?
    – Which company acquired WhatsApp?
  3. Using the search features, find out which company acquired Zoox and what its industry is.
  4. Using the search features, find out how much Google acquired Youtube for.

Post Test Questionnaire:

  • What were your overall impressions of the dashboard?
  • How did completing the tasks on the dashboard make you feel?
  • If you could change anything about the dashboard, what would it be and why?
  • Would you recommend this dashboard to others who are also interested in this topic?

User Research Findings

With an objective to uncover any potential improvements to the dashboard to assist in its usability, these tasks were meant to replicate those of a novice user to the dashboard who may have heard about these major tech acquisitions and is curious to learn more. My research participants were asked to find both basic information and information that required further searching and filtering throughout the dashboard. While both users commented positively on the dashboard overall, several key findings were uncovered in determining its usability:

Finding 1: Need legend on graph
Both users pointed out that a legend was needed to help in determining which company is associated with each color.

Finding 2: Company name not necessary
One user commented that having both the company and acquired company name in the main bubble chart was unnecessary. Instead, it was “more interesting to see how much the acquired company was bought for.”

Original depictions of findings 1 and 2.

Finding 3: Numbers look better
Both users commented on the use of a bar graph to depict the acquired amount and that numbers would look better. With the bar graph there were “too many blank spaces.”

Original depiction of finding 3.

Finding 4: More sort features and descriptions
One user commented that having more features to sort by would be nice to have. Another user mentioned wanting to know more about the acquired companies through either a provided hyperlink or a short description.

Dashboard Revisions

The main findings from my user testing led me to make the following recommended changes to my dashboard:

Recommendation 1a: Add a legend to main bubble chart in order to help determine the color associated with each company.

Recommendation 1b: Remove company name to only display acquired company.

Recommended changes reflecting addition of legend and removal of tech company name.

Recommendation 2: Change acquisition amount depiction from bar graph to numbers.

Recommended change depicting use of numbers instead of bar graphs for acquired amounts.

Reflection

For my final project I decided to use Tableau to conduct my analysis and create my visualizations. As Tableau is widely used in a variety of fields, especially those concerning data and analytics, I wanted to gain more experience using the tool and creating visualizations that depict information in a practical and user-friendly format that can be accessible to all. This final project also presented another opportunity for me to take feedback and recommendations I received from my previous Tableau lab into consideration. As such, I decided on a “less is more” approach when creating my dashboard and to not overwhelm my users with too much information. I wanted users to immediately focus on the bubble graph and recognize that it is the main focal point while the list below is meant to accompany the graph and assist in examining it.

As my main goal for this project was to highlight and introduce users to some of the major acquisitions taken on by tech giants, I envision next steps to include a more in-depth analysis of the acquisitions by conducting further research on the acquired companies. This additional research would assist in providing the hyperlinks and descriptions of acquired companies as suggested in my user testing.

Screenshot of final dashboard.

Link to dashboard:
https://public.tableau.com/views/FinalProject-Acquisitions/Dashboard1?:language=en&:display_count=y&publish=yes&:origin=viz_share_link

Resources

Doucette, M. Visual Capitalist:
https://www.visualcapitalist.com/interactive-major-tech-acquisitions/

Handley, Lucy. CNBC

https://www.cnbc.com/2019/06/11/amazon-beats-apple-and-google-to-become-the-worlds-most-valuable-brand.html

Kenton, W. Investopedia

https://www.investopedia.com/terms/a/acquisition.asp

Swant, M. Forbes.

https://www.forbes.com/the-worlds-most-valuable-brands/#726bdfb5119c

WebHarvey:

https://www.webharvy.com/articles/what-is-web-scraping.html#:~:text=Web%20Scraping%20(also%20termed%20Screen,in%20table%20(spreadsheet)%20format.

Wikipedia:

https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Microsoft

https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Apple

https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Facebook

https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Amazon

https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Alphabet