Google buys API management firm Apigee

Digital marketing is increasingly becoming a network of APIs (Application Programming Interfaces), and today Google boosted its role in that environment by announcing it is buying API management firm Apigee.

The purchase, for a cash total of $625 million, is still subject to stockholder and regulatory approvals. In a statement accompanying the announcement, Google SVP for cloud businesses Diane Greene said:

“Companies are moving beyond the traditional ways of communicating like phone calls and visits and instead are communicating programmatically through APIs. APIs allow the company’s backend services to talk to the mobile and web-based apps used by their customers and partners. Instead of the doctor phoning a prescription into the pharmacy, they can use an app that talks to the pharmacy through an API. Apigee easily enables this by providing a comprehensive API platform that supports secure, stable, multi-language, dev, test, publish and analytics capabilities.”

Other examples: when a small business applies for a loan, the submitted info is submitted to credit bureaus and the bank via APIs. Or, when a point-of-sale system sends warranty information to the product manufacturer, it’s through an API.

Apigee’s customers include Walgreens, AT&T, Bechtel, and Burberry. In addition to transferring user data, APIs can also be used to add functionality to applications or services. For instance, Google notes that:

“Walgreens, for example, uses Apigee to manage the APIs that enable an ecosystem of partners and developers building apps using Walgreens APIs, including the Photo Prints API (enabling mobile app developers to include the ability for their app users to print photos at any Walgreens store), and the Prescription API (enabling users to quickly order refills of prescriptions right from their mobile app).”

Forrester Research VP and Principal Analyst Jeffrey Hammond pointed out to me that pure-play API management firms like Apigee are being scooped up.

For instance, open source software provider Redhat bought 3Scale this past June. In 2013, Intel picked up Mashery, and then sold it to Tibco last year. And, in January of this year, Axway grabbed Appcelerator, whose offerings included API management.

“API management is an incredibly important capability,” he told me, adding that “what we’re seeing is the [combination] of the API management market with mobile backend-as-a-service,” and other mobile cloud capabilities.

Hammond noted that API management involves more than just publication of a spec on how to communicate between various applications, platforms, and services. Management also involves security, the ability to manage loads, different access for different kinds of developers, testing support, and usage analytics, among other things.

Al Hilwa, Program Director at research firm IDC, emailed me that this purchase is “quite impactful for digital marketing because of their reliance on public APIs.”

He added that this “acquisition is a significant investment that Google is making in its enterprise cloud efforts and should be seen as an indication of where the company is now willing to go with [SVP] Diane Greene at the helm of the enterprise cloud business.”

API management now becomes part of the Google Cloud Platform, which becomes a central player in a market that Forrester predicted last year will reach $3 billion over the next five years.

Forrester pointed out that API management is a key way that large tech companies like Google can help companies undertake their digital transformation — and then sell them other services to continue the transformation:

“Enterprise giants like Oracle, HP, and IBM have all entered the market within the last few years, as have vendors with history in SOA [Service-Oriented Architecture] and PaaS [Platform-as-a-Service] for integration scenarios. Why? Rather than just keep up with the startups, incumbent vendors want to become THE strategic vendor that helps their customers make their digital transformation, hoping to then be first in line to sell all the technologies that come in tow. Here, API management serves as the entry point to then sell PaaS, MBaaS [Mobile Backend-as-a-Service], predictive analytics, or, in the case of the SOA-native vendors, a broader platform for life-cycle management and runtime service governance.”

In fact, one of those other digital services is also offered by Apigee: predictive analytics to create and apply models from profiles and behavioral data obtained through APIs.

About The Author

Barry Levine

Barry Levine covers marketing technology for Third Door Media. Previously, he covered this space as a Senior Writer for VentureBeat, and he has written about these and other tech subjects for such publications as CMSWire and NewsFactor. He founded and led the web site/unit at PBS station Thirteen/WNET; worked as an online Senior Producer/writer for Viacom; created a successful interactive game, PLAY IT BY EAR: The First CD Game; founded and led an independent film showcase, CENTER SCREEN, based at Harvard and M.I.T.; and served over five years as a consultant to the M.I.T. Media Lab. You can find him at LinkedIn, and on Twitter at xBarryLevine.