Snowflake, advancing a $1 billion acquisition of Observe... in direct competition with Splunk

It is reported that Snowflake Inc. (SNOW) is advancing the acquisition of Observe, a cloud-based observability platform company. If the deal is completed, the scale is expected to reach approximately $10 billion (about 1.44 trillion KRW), making it the largest startup acquisition in Snowflake’s history.

Observe provides real-time detection tools for issues such as latency or server failures, and helps engineers analyze problems through an integrated chatbot. Existing solutions mainly offer SQL-based analysis functions, while Observe’s feature is its proprietary syntax OPAL, which enables functions focused on time-series analysis. With this, the platform can track log errors during specific periods or perform comparative analysis with previous periods.

Notably, Observe has also been optimized for scenarios such as security threat detection within the Snowflake environment, system optimization to reduce infrastructure costs, and application debugging based on Snowflake’s “Snowpark Container Service.” The platform itself is built on Snowflake’s data cloud, and telemetry data collected from customer environments is also stored by Snowflake.

This acquisition negotiation took place after clear confirmation of the technical synergy between the two companies. Snowflake had previously participated in Observe’s recent funding round through its venture capital fund, raising $156 million (about 224 billion KRW). At that time, Observe’s annual revenue had tripled compared to the previous year, and the number of enterprise customers had doubled. The proposed acquisition amount exceeds three times the total funding since its founding in 2017, indicating recognition of its growth potential.

If this acquisition plan is finalized, Snowflake will directly compete with existing market leaders like Splunk. Observe claims that its solution is more cost-effective than Cisco’s Splunk platform. Additionally, it emphasizes operational simplification and automation features as its main advantages.

This news comes after Snowflake recently acquired the database migration startup Datometry. The startup has technology that helps users easily migrate applications from external platforms to Snowflake. By expanding acquisitions of startups, Snowflake’s strategy to enhance its platform’s influence in the cloud data market is becoming increasingly clear.