The potential acquisition of HubSpot (HUBS.N), a $31 billion U.S. marketing software maker, by Google parent Alphabet (GOOGL.O) would strengthen the company’s position against Microsoft (MSFT.O) and expand its ability to provide cloud-based applications to businesses.
According to Reuters last month, Google was considering making a deal for HubSpot. According to analysts and investment bankers cited in interviews, this would be Google’s largest transaction to date, boosting its offerings in terms of business-serving apps and goods.
Google is already posing a threat to Microsoft Office’s hegemony with its collaborative tools, Google Workspace. According to Cowen analyst Derrick Wood, Google would become a rival in the “customer relationship management” space, which Microsoft serves with its Dynamics 365 products if it were to acquire HubSpot.
“It does appear that Google has aspirations to try to take market share from Microsoft in the productivity suite, and they can use HubSpot to bundle applications together for clients,” Wood stated.
Requests for comments from Google, HubSpot, and Microsoft representatives went unanswered.
Amidst a broader economic downturn, HubSpot, a company that provides marketing tools for small and medium-sized enterprises, is looking for strategies to sustain its sales growth.
During this month’s first-quarter earnings call, HubSpot CEO Yamini Rangan stated that customer demand has decreased as small businesses worried about the financial effects of rising interest rates.
Despite customers cutting back on their spending, HubSpot has continued to thrive, announcing a 23% increase in sales and a 15% operating profit in the first quarter. Equity analysts have cautioned, meanwhile, that if Google hadn’t expressed interest in acquiring the company, its shares would have suffered.
After HubSpot’s most recent earnings release, the majority of analysts that follow the company cut their price targets for the shares. Some have cautioned that the company’s focus on smaller firms, which distinguishes it from larger enterprise rivals like Salesforce (CRM.N), opens new tab, and Oracle (ORCL.N), opens new tab, might turn into a liability if a downturn makes it more difficult for those clients to acquire funding.