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Korea Lags Behind Accelerating M&A-based AI Industry Promotion
M&A in AI Industry
Korea Lags Behind Accelerating M&A-based AI Industry Promotion
  • By Cho Jin-young
  • June 1, 2017, 04:15
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M&A activities and AI service development in Korea is in slow progress.
M&A activities and AI service development in Korea is in slow progress.

 

According to market research firm CB Insights, a total of 34 AI startups signed M&A contracts in the first quarter of this year and the number more than doubled from a year ago.

The firm said that approximately 200 startups handling AI technology have been acquired by large corporations since 2012 and Google has acquired 11 AI startups during the period, followed by Apple (seven), Facebook, Intel, Microsoft (five each) and Twitter (four).

This year, Apple acquired Israeli facial recognition system developer RealFace while Microsoft took over keyboard app developer SwiftKey and Genee, which provides AI-powered scheduling services. Likewise, Twitter purchased Magic Pony Technology, which is capable of performing AI-based image recognition and processing, and Google acquired Kaggle in Australia that has predictive modeling platforms along with a machine learning competition community.

One of the most conspicuous M&A trends in today’s AI industry is that deals are made with startups with brilliant ideas that are capable of creating novel services by combining AI technology with people’s daily lives, security, freight logistics, etc. In the past, the mainstream used to be M&A for obtaining original AI technology.

In Korea, in the meantime, such M&A activities and AI service development is in slow progress now except for two cases. One is Samsung Electronics, which acquired American AI assistant company VIV Labs last year, and the other is Naver, which took over Japanese AI assistant startup Vincle more recently. Experts also point out that the majority of South Korean AI startups are working on medical and daily living services, resulting in the lack of diversity.

According to the National Information Society Agency of South Korea, the 19 largest AI startups in the country include five medical, four providing daily living services, two in the education sector, one in hardware and another one in e-commerce while only six are those doing platform business to supply universal AI technology to various sectors. Industry insiders are saying that this lopsidedness may lead to South Korean startups falling behind in the competition in the global AI market.