How Amazon’s acquisition of Whole Foods affects the data battleground


Why would Amazon, one of the biggest tech companies in the world, spend $13.4 billion to acquire Whole Foods, a grocery chain?

Some analysts believe this is Bezos’ response to Walmart’s inroads into online retail. But I think the bigger picture is about data, the new oil, the new gold, the subject of a not-so-secret battle between the leading tech companies (Apple, Google, Facebook, Microsoft and Amazon).

While you scroll through our social media timeline, search the web, watch videos online and do a lot of different things on your smartphones and computers—and all of it without paying a dime—the companies that provide those services collect your data.

Why do they need your data? The more data companies can gather, the more efficient their artificial intelligence algorithms can become. AI is what makes your search engine smarter, your YouTube sidebar more interesting, and the ads you see in websites more compelling, among others. Facebook’s face recognition depends on AI, as do Siri, Cortana, Google Assitant and Amazon’s Alexa.

Scientists are still working on AI that needs less data and works more like the human brain. Until that code is cracked though, training machine learning algorithms depends on large datasets. That’s why (with the exception of Apple maybe) all of the big five have aggressive data collection programs.

And most of them have solid platforms to collect data: Facebook has its two-million-strong social network; Google has its search engine, a ton of services, and the Android operating system that runs on billions of devices (in fact, Google already has so much data that it recently decided it no longer needs to scan Gmail users’ emails for ad personalization purposes); Apple has iOS and the hundreds of millions of iPhone and iPads running them; Microsoft has its flagship Windows OS, still the most popular desktop and laptop operating system.

Amazon is the biggest provider of cloud infrastructure, but that doesn’t provide the Seattle giant with a consumer-facing interface to collect data directly from users. It has Alexa and the Amazon Echo, which is still the leading smart speaker. But adoption is not comparable to its rivals. And with Google entering the space with Google Home, backed by the behemoths unrivaled data empire, Amazon will be hard-pressed to preserve its lead.

Still, what does the acquisition of a grocery chain have to do with data collection? Amazon, the company that started as an e-bookstore, has dabbled in brick-and-mortar retail before with its physical bookstores and grocery drive-through stores.

But its bolder move was the introduction of Amazon Go, its experimental no-checkout store. While the project has hit some hurdles, it gives a glimpse of how artificial intelligence and the Internet of Things are entering and changing the physical world. Thanks to advanced sensors, computer vision algorithms, eye-tracking technology, and a slew of other AI-related techniques, quantifying the physical world and understanding customer behavior in retail stores is becoming easier.

And with the acquisition of Whole Foods, Amazon just got itself a vast customer-frequented real estate. Combined with Amazon’s experience in sensing the real world, the Whole Food acquisition might provide the giant with just the right platform it needed to gobble up consumer data in quantities it needs.

In this years developer conferences, Amazon’s competitors announced projects in augmented (or mixed) reality, possibly the next big computing platform. Google’s Lens, Facebook’s Camera Effects and Apple’s ARKit add augmented reality features to your smartphone. Microsoft, which obviously doesn’t have a mobile platform wants to conquer the office space with its HoloLens gear.

Their goal is to accompany you wherever you go and through the lens of your smartphone’s camera (or AR headset for that matter) see and collect data about the world—and you. Amazon’s goal on the other hand is to be the world wherever you go—and collect information about you.

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