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Can Cloudera’s $5.3 billion buyout beat back Amazon and Snowflake?

June 1, 2021, 8:24 PM UTC

After years of struggle, Cloudera is throwing in the towel. The big data-processing firm has accepted a $5.3 billion private equity buyout in the hopes of revamping its business away from the scrutiny of the public markets.

If you’re unfamiliar with Cloudera, here’s a quick recap. Founded in 2009, the firm got its start helping companies store and process “big data” using Google-inspired (and Yahoo-beloved) open-source software called Hadoop. In 2017, the Intel-backed company went public at about $18 per share, a price the business has rarely exceeded since.

Blame Amazon. The retail giant’s fast-growing cloud division, Amazon Web Services, has been on a tear, leaving once-hot Cloudera and its peers to fight for scraps. Already trending downward by 2019, Cloudera completed a $5 billion all-stock merger with its biggest rival, Hortonworks, that January. The two businesses had trouble integrating and, by June, CEO Tom Reilly was shoved out after posting poor financial results.

Blood was in the water—and sharks sniffed it. A few months after the management shakeup, activist investor Carl Icahn took an 18% stake in the business and landed two deputies on the company’s board. Within a year, the company was rumored to be exploring a sale—one of the few pieces of news that caused the stock to jump. (Never a good sign.)

For a while, Cloudera was a hotshot, promising businesses to crunch data outside of the scary public cloud—that is, computers hosted off-site—which many IT managers feared as being insecure. But the public cloud has grown stupendously—as has the fortunes of Amazon, Microsoft Azure, and Google Cloud. Newer, more cloud-native rivals, such as <a href="https://fortune.com/2020/09/15/snowflake-ipo-database-oracle-frank-slootman/">Snowflake</a> and Databricks, stole Cloudera’s thunder.

Cloudera’s rise and stall is a cautionary tale. In the software industry, where innovation is everything, shifting winds can turn a hotshot company cold. Hadoop, once the in-thing, is no longer; and Cloudera’s decision to be bought by private equity firms KKR and Clayton Dubilier & Rice is an admission that it cannot whip itself into shape alone.

Alongside the buyout, Cloudera said it acquired two analytics startups, Datacoral and Cazena, for undisclosed sums. With more money at its disposal, expect Cloudera to make additional acquisitions in an attempt to beef up its public cloud chops. But as years of stock underperformance have shown, it will continue to be a tough slog.

Robert Hackett
Twitter: @rhhackett
robert.hackett@fortune.com

NEWSWORTHY

Do you hear what I hear? Apple plans to update its AirPods earphones hardware. A new entry-level version is planned for later this year, while a second-generation AirPods Pro model is slated for next year. The latter device is said to include "updated motion sensors with a focus on fitness tracking," Bloomberg reports.

Ear to the ground. As a new AirPods Pro user, I agree with this Verge review that they're beautifully designed. But at $250, they're pricey—especially when you can buy Galaxy Buds Pro for $150 on Amazon. Speaking of Apple and audio, the company has delayed the rollout of its podcast subscription service to sometime this month.

Private parts. After months of blowback, WhatsApp says people who do not accept an upcoming privacy policy change won't be negatively impacted. “[W]e will not limit the functionality of how WhatsApp works for those who have not yet accepted the update,” a WhatsApp spokesperson told The Verge. The change is supposed to make it easier for people to communicate with businesses using the chat app.

Gaza-lighting. Instagram is reshuffling its algorithm to boost the weight it gives to posts reshared from other feeds. The photo-sharing app usually gives priority to original content. The change, which is designed to help breaking news be seen, comes after critics alleged that Facebook was suppressing pro-Palestinian content during the recent conflict in Gaza.

That's not fare. As the world reopens, Uber and Lyft are having trouble keeping up with demand. The companies are jacking up the cost of rides to compensate. The average price of a lift was up 40% year-over-year in April, the New York Times reports. Meanwhile, the future for Uber Eats and DoorDash is in next-hour delivery for all sorts of goods, not just meals

FOOD FOR THOUGHT

Who you gonna call if your business gets hit with ransomware? You may have to bring in a negotiator, someone who will wrangle with cybercriminal gangs to get your data back. Unfortunately, all too often people pay up. "The average ransom payment in the first three months of this year was $220,000, up a staggering 43% from the previous quarter," as Adrian Croft writes in the latest issue of Fortune.

Kurtis Minder has some advice about how to negotiate with criminals who extort millions of dollars by crippling companies’ computer systems and stealing their data: Don’t call them “bad guys.”

“The bad guys know they are bad guys—they are trying to pretend to be businesspeople,” says Minder, who, as CEO of cyber-intelligence specialist GroupSense, has negotiated on behalf of at least two dozen organizations targeted with so-called ransomware. “As long as you pretend with them that this is just a normal business transaction, it goes better.”

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BEFORE YOU GO

Investigative blog Bellingcat found that U.S. service members tasked with guarding the nation's nuclear weapons cache were using publicly accessible, digital flash cards to learn sensitive information, like where "hot" vaults are located and what security protocols protect these facilities. The flash cards were taken down after Bellingcat informed the Pentagon of the breach, but archives are still available via the Internet Archive, as Vice Motherboard reports.

Whatever test these folks were studying for, safe to say they failed.

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