In a bid to reclaim lost ground, Google is reportedly acquiring HubSpot

In the last month, several reports have emerged of a potential HubSpot acquisition by Google, talks for which are reportedly ongoing.

Yesterday, CNBC’s David Faber also hinted at an acquisition. He said,

There have been many reports about HubSpot being in conversations with Google. My understanding is absolutely true, all-stock deal for Alphabet to acquire HubSpot.

Following these reports, HubSpot stocks jumped 9% in Tuesday’s trade.

The potential HubSpot acquisition by Google was first reported by Reuters in April’24. It mentioned that Google’s parent company, Alphabet, had reportedly met with investment bankers at Morgan Stanley to discuss a suitable offer and whether the regulators would green-light the deal.

Sources privy to the matter suggest that negotiations between Google and HubSpot are ongoing, but a deal hasn’t been finalized yet. Another potential buyer may also emerge, according to a report in Bloomberg.

If it goes through, the deal would be the biggest this year and in Alphabet’s history, given HubSpot’s market evaluation of roughly $30 billion. However, both the involved parties have remained tight-lipped about the ongoing negotiations. A HubSpot spokesperson told Reuters,

As standard practice, HubSpot does not comment on rumors or speculation. We continue to focus on building a great business and serving our customers.

Google’s HubSpot acquisition a concern for Microsoft:

For the unversed, HubSpot develops marketing software for small and medium-scale enterprises, a key factor setting it apart from companies like Salesforce and Oracle, which specifically cater to large-scale clients.

It is HubSpot’s inherent focus on smaller companies that makes it a perfect investment for Google, which itself is eying a comfortable position in cloud computing, a landscape where Microsoft Azure poses a formidable challenge to Google Cloud and AWS (Amazon Web Services).

According to Statista, in Q1 2024, AWS, the biggest in the space, commands a 31% market share, followed by Microsoft Azure’s 25% and Google Cloud’s 11%.

Microsoft, in many recent collaborations, has had its partners switch their services to Microsoft Azure, including Seimens and Khan Academy.

With the acquisition in place, Google’s parent company, Alphabet, would make inroads into the small and mid-sized client base, in addition to providing it with crucial data that would help streamline the integration of AI in the native search engine.

As of now, we can only wait for an official confirmation from Google or HubSpot about the ongoing negotiations. But given how these deals usually proceed, it could take a while!

Do you think Google’s acquisition of HubSpot, if it goes through, would affect Microsoft’s standing? Share with our readers in the comments section.