Google Acquires Alter to Compete With TikTok

In August 2022, Google quietly acquired AI startup Alter. The purchase was announced in October 2022 by TechCrunch, with Google confirming that the deal had occurred.

What Is Alter?

Alter was founded by Jon Slimak and Robin Raszka under the name Facemoji, with its headquarters located in the United States and Czechia. It was a plug-and-play platform that helped game and app developers add avatar creation systems to their own products.

In 2021, an early seed round of investing raised $3 million from investors that included Play Ventures, Roosh Ventures and Twitter. The startup then changed its name to Alter.

Google's Acquisition of Alter

Google spent approximately $100 million for the purchase of Alter, although neither Google nor Alter announced the acquisition publicly at the time. Some of the news leaked out through Alter executives' LinkedIn accounts. Co-founder and COO Slimak, for example, announced on LinkedIn that he was joining Google to build avatars. The LinkedIn posts didn't, however, acknowledge the actual acquisition. Google hasn't disclosed any of the financial terms of the deal.

What Is Google Expected to Do With Alter?

Google's purpose in acquiring Alter was to set itself up to compete against TikTok more effectively and to boost its own content creation. It isn't entirely clear, however, how Google specifically intends to make use of Alter's tech and team members.

Google's parent company Alphabet has already moved into the content creation space with YouTube Shorts, which has proven to be a huge success. The short-form video platform, which is part of the Google-owned YouTube platform, launched globally in mid-2021. Within a year, it had attracted 1.5 billion active users per month.

YouTube Shorts functions as a competitor not only to TikTok, which has 1 billion monthly active users, but also to Instagram Reels, owned by Facebook. Instagram Reels sits at the top of the heap with 2 billion monthly active users. Major brands have established a foothold on TikTok, which is the third-largest global social media platform. However, users sometimes find it challenging to create videos for sharing on the site, which requires users to post daily or more frequently if they want to avoid demotion on the platform.

It's possible that Google intends to bring avatars to YouTube Shorts, a move that would allow it to catch up to that feature on TikTok. Facebook, Instagram and Snapchat already employ avatars, with Snapchat leading the way with its Bitmoji, full-body avatars that can employ face-mapping. In the interim, Google has already introduced custom emojis to Google Chat, encouraging users to express themselves through the tech.

The Alphabet/Google move into content creation includes investments in VR and other extended reality (XR) platforms. In October 2022, Alphabet's venture capital wing participated in a $12 million round of funding for VR startup SideQuest. The intention is to expand SideQuest into becoming a hub for XR development. With the purchase of Alter, Alphabet has now made eight significant acquisitions in 2022, including cybersecurity firms Siemplify and Mandiant, as well as AR technology firm Raxium.