Twitter is an American microblogging and social networking service on which users post and interact

with messages known as "tweets". Registered users can post, like and retweet tweets, but
unregistered users can only read them. Wikipedia
Stock price: TWTR (NYSE)  $54.23  -0.21 (-0.39%)
29 Dec, 2:21 pm GMT-5 - Disclaimer
CEO: Jack Dorsey (30 Sep 2015–)
Founded: 21 March 2006, San Francisco, California, United States
Users: 321 million active users; (February 2019)
Employees: 4,600 (September 2019)
Headquarters: San Francisco, California, United States
Founders: Jack Dorsey, Evan Williams, Noah Glass, Biz Stone
Magic Pony Technology Ltd.
Company

magicpony.technology
Description
Founded: 2014
UK

Intro
The case which was been assigned to us is based on the acquisition of a technology by a company to
survive in the race of AI. “Twitter pays US$150 million for London AI start-up Magic Pony (18-month-
old start- up Magic Pony) ”. The deal was finally publicly announced on 20 June 2016 on Twitter’s blog
The payout was the largest exit for a start-up in Europe to date.

at the end of 2014 when Bishop and his co-founder, Zehan Wang, met at a start-up incubator. Armed with
postgraduate degrees in signal processing and visual information processing from Imperial College, the
young men had dreams of building technology that was could sharpen blurry images and videos on
computers and smartphones. Such a technological capability, they believed, would be most beneficial to
live streaming businesses.
They observed that mobile users had to put up with low-quality images displayed on their
devices although computing power had increased exponentially in the past fifty years, fulfilling
Moore’s Law.9 It was a golden opportunity to utilise their knowledge to address that problem.
They decided to focus on developing technology that was capable of significantly improving
the image quality of photographs and videos displayed on digital screens. Deep learning was
the technology underpinning Magic Pony’s software algorithm.
Magic Pony was the first company to optimize technology that delivered high quality video streaming
over low Internet bandwidth
 AI and Start-ups
Commonly used to describe machines that could think like humans, the term ‘artificial intelligence’ was
coined in 1955 by John McCathy.
AI began to make news headlines again in the early 2010s, thanks to the convergence of three forces
– the invention of deep learning algorithms, explosive growth and availability of data, and increased
computing power (in terms of faster and cheaper GPUs3). Although the AI era seemed to have arrived, AI
applications such as image processing and speech recognition were still considered to be in the early
adopter stage.
.The US was the global AI market leader, with 40% of AI companies based there, primarily in San
Francisco’s Silicon Valley and Boston areas

London had developed a global reputation as a centre of AI expertise and a hotbed for AI start-ups in the
mid-2010s. As the second-largest ecosystem of AI start-ups after the Silicon Valley, London had attracted
venture capital and intellectual talent to gather at its city hub and nurture bright ideas that could be
eventually commercialized.

The main advantage of UK was they were the financial hub and with the govt. support and an active
research and innovation ecosystem had developed. Recognising the economic benefits that AI could
bring, at an estimated US$814 billion by 2035

In 2014, Google sent shockwaves across the AI world with its acquisition of DeepMind, a company that
had created a neural program capable of beating a human opponent at video games, for around US$582
million.7 In the following year, Apple bought over VocalIQ for its technology that could understand
human speech

Microsoft joined the race in 2016 and reportedly spent US$250 million to acquire SwiftKey, a predictive
keyboard for smartphones powered by machine learning. Dennis Hassabis, earned degrees from
Cambridge and University College London, while SwiftKey founders, Ben Medlock and Jon Reynolds
were from Cambridge. VocalIQ, too, was spun out from Cambridge.

Demystifying Deep Learning

Deep learning was a technique used to implement machine learning, which was a branch of AI. Machine
learning described the ability of computers to learn directly from data and examples labelled by humans -
for example, from images of objects that were tagged with names to describe them.
Ex : in 2012 after computer scientists at Google demonstrated

a simulation that could recognise cats from ten million random videos without being told what a cat
looked like, using a deep learning algorithm.

Twitter’s Irresistible Offer

. The tech giant had a challenging year in 2015 as it struggled to grow its user base, which
had plateaued at an average of 320 million monthly active users. Investor concerns over
slow growth in consecutive quarters were evident by a dip in its stock price of around 22%
over a 12-month period in the same year.15
 In an attempt to attract more users, Twitter shifted its focus to video, and particularly to the
live streaming of events. It was betting on capturing a wider segment of viewers through the
live streaming of hugely popular sporting events in the US, such as the Big Four leagues for
baseball, hockey, basketball and football games.

Twitter had had a string of acquisitions in the past decade to strengthen its AI and video capabilities.
Madbits and Whetlab were two machine learning start-ups that Twitter had bought in 2014 and 2015
respectively. It had also acquired Periscope, the live video streaming app in 2015 for US$86 million, and
Vine, the looping video app in 2012 for US$30 million.

While Periscope allowed users to make live broadcasts to viewers anywhere in the world, its
performance was often limited by mobile network connectivity, bandwidth, camera phone
resolution as well as the lighting conditions under which the video was broadcasted. Magic
Pony bridged that gap by automatically improving video quality and therefore enhancing the
overall viewing experience.

Besides, securing AI talent would enable Twitter to keep up with its key rivals – Google,
Facebook and Microsoft – in the AI race. Google had boosted its image search technology
through the acquisition of DNNResearch, a neural networks start-up, in 2013. Facebook had
similarly pursued research on image recognition by using deep learning to label objects in
photographs, in the hope of applying the technology to live video one day. Microsoft was not
far behind when it showed off an AI bot, named CaptionBot, which could scan photographs
and automatically create captions using natural language. In view of these developments, the
acquisition of Magic Pony’s imaging technology was timely to enable Twitter to be on par
with the rest of the tech corporations
the deal was a market validation of the start-up’s idea of solving a problem that was
technically challenging, socially meaningful and commercially viable. Other than cashing
out for a handsome sum of money, the potential to scale in reaching out to a wide audience
was a key consideration for the Magic Pony founders.

AI is the talk of the town and twitter being one of the fastest growing social media
platforms had to level up its AI game. with the acquisition of magic pony technology twitter
wanted to build the most advance AI platform in the world, at twitter scale to apply the
most complex AI algorithms to the most challenging dataset seamlessly and enhance the
quality of their product. Selling Magic pony to twitter was an ideal decision made by
Bishop in 2016, after the dip in twitter’s stock in 2015, twitter shifted its focus to live
streaming and Magic pony’s technology had what it takes to provide users with the best
viewing experience, besides with the emerging technologies twitter had to keep up with its
rivals, viewing the developments, the acquisition of magic pony’s imagining technology was
timely to enable twitter to be on par with the rest of the tech corporation.