AWS, Azure and Google Cloud are poised to drive vertical M&A for years to come.
By vertical M&A we refer to M&A transactions that would enable to AWS, Azure and Google Cloud to build a footprint at the application layer across various industry verticals. The obvious acquisition targets would be customers and partners of AWS, Azure and Google Cloud. AWS and Azure have the advantage as they have more customers than Google Cloud. Azure in particular has Enterprise DNA given it is part of Microsoft.
A vertical M&A strategy would augment each platform’s organic growth efforts. The M&A scrutiny applied by the Biden Administration’s FTC is only temporary. FTC Chairpeople change. Further, as we have stated previously, the Federal Government will be the largest AWS, Azure and Google Cloud customers for decades to come and for this reason FTC deal scrutiny will abate over time.
Here are two examples of prospective M&A transactions. Within the Financial Services industry vertical, FIS is migrating a number of its services to Microsoft Azure. Thus, FIS at a minimum ought to be on Microsoft’s FinTech M&A landscape. DataRobot – an AWS partners across Financial Services & insurance – would be a logical acquisition candidate for AWS, especially given DataRobot’s Machine Learning core competency.