June 23, 2016

Twitter spreads its wings with Magic Pony Technology acquisition

Twitter is on the move in the video technology marketplace.

Twitter is on the move. On June 20, Twitter announced it had purchased Magic Pony Technology, a London-based developer of machine learning and visual processing technology. This deal will broaden Twitter's current video capabilities, as well as add significant talent to its ranks, as Magic Pony's team includes 11 PhDs, along with alumni from some of the top labs in the world. Magic Pony's employees' areas of expertise include computational neuroscience, machine learning, computer vision and high-performance computing.

What is this deal worth?
Two separate sources told TechCrunch that the deal is estimated at $150 million. This deal comes right on the heels of Twitter's $70 million investment in the audio-streaming service SoundCloud, according to Vanity Fair. Based on Twitter already having increased its maximum length for standard video uploads from 30 seconds to 140, and extending the same option to its Vine users, Twitter is on the move to launch headfirst into the video technology marketplace. 

"Machine learning is increasingly at the core of everything we build at Twitter," Jack Dorsey, Twitter CEO and co-founder, said. "Magic Pony's machine learning technology will help us build strength into our deep learning teams with world-class talent, so Twitter can continue to be the best place to see what's happening and why it matters, first. We value deep learning research to help make our world better, and we will keep doing our part to share our work and learnings with the community."

Jeremy Rishel, Twitter's VP of engineering, said the Magic Pony team will service the "European base of the Twitter Cortex team" and draw in further talent from the region.

Is this deal too little, too late?
This deal comes after months of speculation regarding Twitter falling stock and possible buyout options. Following Microsoft's high-profile acquisition of fellow online titan LinkedIn and Recode​'s reporting on top officials departing the company's ranks, many wonder whether or not Twitter will be the next target in a flurry of tech merger and acquisition activity.

Some of the strongest contenders for a Twitter acquisition include Google, Apple and Microsoft, according to The Street. While Google stands apart as one of Twitter's fiercest rivals in terms of real-time information access, Microsoft's recent buyout of LinkedIn caused some industry analysts to speculate whether Twitter's business-oriented users might mesh well with LinkedIn's intelligent business news feed and networking reach. Meanwhile, Apple has stated before that it is open to the possibility of larger-scale acquisitions, where with its $233-billion cash balance, buying Twitter – which is valued at around $11.4 billion – might not be out of the question, according to The Street.

Despite the M&A speculation, Twitter recently launched Twitter Engage, a new app to help celebrities and public figures connect with their fans, grow their audience and see built-in analytics tools, without a traditional timeline scroll. This way, high-profile users can focus on building their brand or name easily. Increasing the length of created and shared videos on Twitter and Vine will also help empower users to build up their businesses and grow their audiences. Video tweets increased by 50 percent since the start of 2016, making this a strategic move in terms of Twitter's audience.

"Video is becoming increasingly central to the real-time conversations happening on Twitter," Dorsey explained. "We're investing heavily in videos and creators. We want to be the best place for creators and influencers to build an audience and make it easier for creators to make money on Twitter, and soon Vine."

The Magic Pony deal will undoubtedly add value to Twitter's current video technology performance, making it an even more ideal option for industry leaders looking to acquire this innovative social media empire.