All of the mega tech companies known as the “Top 10” have deepened their engagement in the Israeli market over the past few years. Some have invested heavily in new facilities and have hired Israeli techies to help develop their core businesses, while others have acquired Israeli start-ups and absorbed their innovative technologies into their products. All ten have demonstrated a clear show of confidence in Israel’s ecosystem.
Investing in Israelis
Earlier this year, Microsoft hired Assaf Rappaport, a 34-year-old cyber-security prodigy – a hacker, essentially – as its new head of R&D in Israel. The young man, a veteran of the IDF Intelligence Corps’ elite Unit 8200, will be responsible for future-proofing Microsoft’s defense of its crown jewels in the cloud. Microsoft is a cloud-first company now; everything is there: Azure, Cortana, Office, even Minecraft. In other words, Microsoft’s cloud will be an absolutely critical part of its core business going forward, and the Redmond-based company is entrusting its security to a 34-year-old Israeli.
Up until this year, Amazon had only two lines of activity in Israel, one for its AWS business and a drone R&D facility in Herzliya, just north of Tel Aviv, for its Prime Air business. Those are two very important lines of business for Amazon in and of themselves. But now Amazon is hiring 100 Israeli engineers and natural language processing experts to boost Alexa, its smart virtual assistant. The idea here is to significantly advance Alexa’s vocal search capabilities for Amazon’s core business – retail. Once again, we’re seeing a global company, one of the most successful firms of all time, giving Israelis the toughest, most important, mission-critical challenges: Bring Alexa to life faster and better than anyone else, including Siri, Cortana, the Google app, or Bixby.
Oracle has recently announced that it plans to enter the cloud infrastructure race, trying to claw away market share from Amazon, the runaway leader, and Microsoft, which is itself trying to play catch-up. Google's cloud is also a player, but Oracle, with a market capitalization of $199 billion, is very late to this game – a very important game, as most business applications are moving to the cloud. Still, the computer giant plans to quadruple the number of its giant data-center complexes over the next two years. Oracle's announcement comes exactly one year after it opened an accelerator for cloud innovation in Israel.
Strategic acquisitions of Israeli start-ups
Several years ago, Google bought Waze, an Israeli navigation app, in its mission to connect the online and the offline worlds. Waze gives Google so much more than just a navigation app: it provides Google with vital data on people’s driving habits around the world, and it opens a new layer of business partnerships and advertising in the offline world, including carpooling. The latter gives Google some market traction against Uber. Waze should eventually be an integral part of Google’s autonomous cars business. Other parts of Alphabet, Google's parent company, have recently started looking to engage with Israeli start-ups in AI, robotics and material science – core areas of Alphabet “Other Bets” businesses.
Facebook’s acquisitions of Israeli companies, specifically Onavo and Face.com, have significantly boosted Facebook’s core business: targeted advertising. Face.com involves facial recognition and friend tagging, while Onavo focuses on mobile analytics. These acquisitions also led to the idea of Internet.org, Facebook’s project to bring free Internet to developing countries and remote locations – potentially the source of Facebook’s next several billion users. Facebook’s R&D team in Israel is pushing the envelope in serving the underconnected/unconnected populations that is leading to very significant technological breakthroughs like Express Wi-Fi and FB Lite, which could have a major impact in both developing markets and mature ones. These are not sideshows to Facebook’s main business; these are the primary drivers of Facebook’s main business.
Apple’s second largest R&D center is in Israel, and it's reportedly working on processors, chips and sensors that are increasingly important to Apple's new devices and to augmented reality technology, meaning Apple’s future beyond the phone. Apple's 2013 acquisition of sensor company PrimeSense provided the Cupertino-based mega-company with technology in motion and depth capture, which are increasingly used in Apple's phones, TV and smartwatch.
Intel, the world's largest chipmaker, has been deeply engaged with Israeli innovation for decades, but its recent acquisition of Mobileye, an advanced driver assistance company from Jerusalem, signals Intel's intent to be front and center in the coming autonomous vehicle revolution. Through Mobileye, Intel has announced it will partner with BMW, Nissan and Volkswagen on autonomous driving, opening a vast new opportunity for Intel's core business.
Asian giants too
American tech giants aren’t alone. China’s Alibaba and Baidu are increasingly strengthening their relationships with Israel too. Jack Ma himself gushed at the Israeli entrepreneurial spirit during his first ever visit to Israel this year. Alibaba is an ambitious company, reflecting China’s growing global confidence and determination. Alibaba’s recent acquisition of Israeli Visual QR Code company VisualLead reflects how important VisualLead’s technology is to Alibaba. Here’s what Alibaba bought: the ability to turn any image, logo, profile picture, animation or even video into an engaging visual code that connects consumers and brands seamlessly. No more friction anywhere along the value chain (nobody in China waits for the waiter to take their bill anymore).
Baidu is looking at Israeli companies that focus on the domains of artificial intelligence, computer vision, voice identification, cybersecurity, sensors and automotive chips, the company's corporate ventures chief told CTech.
South Korea's Samsung has quadrupled its commitment to Israeli innovation, with two venture capital operations and two R&D facilities. Through its Israeli investment arm Samsung NEXT Tel Aviv, Samsung has invested in over ten early-stage Israeli start-ups over the past two years, several in the field of AI. The Samsung Catalyst Fund, which also has an Israeli presence, invests in later-stage firms. Samsung also operates two research and development centers in Israel, a camera technology center in Herzliya and a Tel Aviv-based center developing semiconductor technology, all core to Samsung's connected devices future.
Global beta site
The picture that emerges is that the world's biggest tech companies are increasingly doing crucial innovation work in Israel that significantly impacts their core businesses. These are just ten examples, but they’re the biggest ones. If the ‘Big 10’ tech firms are so involved in Israel, then it’s safe to assume that at least some of the other 300+ multinationals currently engaging with Israeli innovation in some form or another are doing so too.