Written by Raqueem Khan
Edited by Vani Rao
Supported by Joma Jose
Acquisition of cyber security firm aimed at making the internet a safer place
The New Year has ushered in an era of hope for the Indian start-up ecosystem. Earlier this month, Facebook (NASDAQ:FB) acquired Bangalore-based start-up Little Eye Labs, and now Google Inc. (NASDAQ:GOOG) has taken over an India-linked cyber security firm, Impermium.
Google seems to have decided to continue its aggressive stance on acquisitions this year too. In 2013, the tech giant took over as many as 18 companies. So far in 2014, it has acquired three firms – smart thermostat maker Nest, Swiss alarm apps developer Bitspin, and cyber security firm Impermium.
Last week, Impermium CEO and Co-founder Mark Risher said in a post on the start-up’s website that Impermium was joining Google. “By joining Google, our team will merge with some of the best abuse fighters in the world,” he wrote.
“As sites gain in popularity, criminals, and miscreants are never far behind, and Impermium has worked hard to defend some of the largest and fastest-growing sites,” Risher added.
It is not clear whether Google has acquired the company for its technology or staff, popularly known as ‘acqui-hiring’. Of late, several technology companies have been acquiring start-ups mainly to add talented engineers to their staff. Google, however, did not disclose the terms of the deal.
The acquisition of a cyber security firm makes sense for Google, which has been working on ways to increase security on its social media platform offerings such as Google+ and YouTube. As it joins Google, Impermium will discontinue offering services to third-party websites. The company, however, did not say what would happen to Impermium’s current customers.
Tim Drinan, a Google spokesperson, said: “I can confirm the deal, but we aren’t providing any other details (including terms of the deal, employment details, investor details, etc.).”
Google+ Vice President Bradley Horowitz also said in a status update last week: “Google’s spam and abuse teams are industry-leading and world-class. Impermium should fit right in.”
Impermium was founded in 2010 by former Yahoo! “Spam Czar” Mark Risher, Vish Ramarao, and Naveen Jamal. Previously, the trio led the Anti-spam and Security Group at Yahoo!, where they drastically reduced spam and fraud for Yahoo! customers.
Impermium has gained significant momentum since its inception in 2010. During its beta phase, the company protected more than 300 million social web transactions in pilot projects spanning social networks, media companies, and top consumer web sites with significant social media engagement. Impermium also provided anti-web spam and fraud/abuse support to DISQUS, a social media commenting platform that serves 600 million monthly users. Impermium is also deployed across some of the world’s largest media sites including CNN, The Atlantic, Fox News, and Time Magazine.
Moreover, Impermium has so far protected over 1.5 million websites and processed over $8 billion worth of total transactions during its three-year history. The company has raised a total of $9 million in two rounds of funding from investors like AOL Ventures, Accel Partners, Data Collective, Freestyle Capital, Highland Capital Partners, Greylock Partners, Social+Capital Partnership, and Morado Ventures.
Before its acquisition by Google, the company was building a risk-evaluation platform that would improve account management by identifying fraudulent registrations, compromised log-ins, and risky transactions. It has nearly 300,000 clients, including prestigious names like Tumblr, Pinterest, Typepad, and Washington Post.
The social web spam problem
Five years ago, social web spam was practically non-existent. In October 2012, an industry report indicated that 91% of users have experienced spam on a social network.
According to a report by Nexgate, a provider of cloud-based brand protection and compliance for enterprise social media accounts, social media spam has increased by 355% in the first half of 2013. Meanwhile, e-mail based spam has remained flat, and in some cases even decreased, over the past 24 months. Spammers and cyber criminals are causing much more damage on the social web. This is because more people are exposed to a given posting, and users trust spams and ploys much more readily when they appear to come from the users’ social network.
Security companies hot acquisitions
In recent years, tech giants have been acquiring security companies to thwart security threats, which have increased manifold and the implications of a breach have become more severe than ever. According to Gartner, the Global Security Technology and Services market was estimated at $67.2 billion in 2013, up 8.7% from $61.8 billion in 2012. Gartner expects the market to grow to more than $86 billion by 2016.
According to Gartner analysts, three main trends have a significant impact on the Software Security market — mobile security, big data, and advanced targeted attacks. This is mainly because many large companies incur huge losses and suffer significant dents to their market image due to security breaches. Recent breaches have left the likes of Google, LinkedIn, and Facebook looking rather embarrassed.
According to a recent report by World Economic Forum (WEF) in collaboration with global consultancy McKinsey & Company, failure to boost cyber security could cost the world economy a staggering $3 trillion in the near future. Titled ‘Risk and Responsibility in a Hyperconnected World’, the report cautioned that there could be increased cyber attacks, if there is a failure to strengthen capabilities for deterring such activities.
Major technology trends, including massive analytics, cloud computing and big data, could create between $9.6 trillion and $21.6 trillion in value for the global economy. However, large institutions lack the technical know-how to create and implement effective decisions about cyber resilience, the report noted. Overall, the cyber risk management capabilities of a large majority of firms are at a nascent or developing stage, the report concluded.
The past couple of years saw a host of such acquisitions taking place with companies looking to bridge the security gap. In 2013, IBM acquired Israeli-based Trusteer for its malware and fraud prevention technology (estimated to be around $1 billion) to combat financial frauds and security threats in September 2013, and Cisco acquired Sourcefire, known for its open-source intrusion prevention system Snort, for $2.7 billion in October 2013.
In 2010, there have been some significant acquisitions, including HP snapping up ArcSight for $1.5 billion, Symantec acquiring Verisign for $1.3 billion, and Intel purchasing McAfee for $7.8 billion.
With security threats marching one step ahead of security deployments, we can expect to see more acquisitions of security companies by tech firms looking to up the ante in the security game.
Cyber security firm Impermium’s success story has been scripted by Risher and two Indians Vish Ramarao and Naveen Jamal.
Originally from Thanjavur in Tamil Nadu, India, Jamal studied in the US and worked there as a software engineer in a small firm before joining Yahoo!. Jamal moved to Bangalore to set up Impermium’s India office. Vish, a Bangalorean, settled in the US after his studies there.
Asked whether the acquisition of Impremium is going to help the Indian start-up ecosystem, Kumar Rangrajan, the Co-founder of Little Eye Labs that was taken over by Facebook earlier this month, said, “I sure hope so. It’s always great to see Indians involved in a very central role in such recognitions by global giants.”
However, Mukund Mohan, CEO-in-residence of start-up advisory Microsoft Accelerator, sought to clear the confusion over Impermium’s India connection. “Look, Impermium is not an Indian company. It is a US-based start-up that has an Indian connection. Google has taken over the California-based company. It is not going to have much impact on the start-up eco-system in India.”
Earlier this month, Facebook acquired its very first Indian start-up that creates tools to help mobile app developers to optimise their products’ performance. Whether for technology or talent, Indian entrepreneurs are certainly attracting the interest of tech giants.If not anything, the latest acquisition by Google would inspire many more people with leadership skills to launch their own start-up.