Protocol | Enterprise

Databricks is playing the long game in its battle against Snowflake

The data analytics market is Snowflake's to win right now, but Databricks CEO Ali Ghodsi doesn't expect its advantage to last.

​Databricks CEO Ali Ghodsi speaks during a 2019 Bloomberg Television interview.

Databricks CEO Ali Ghodsi is intent on moving into Snowflake's turf.

Photo: David Paul Morris/Bloomberg via Getty Images

Databricks CEO Ali Ghodsi is playing the long game to unseat Snowflake as the darling of the data world.

Snowflake made a name for itself helping companies use stored information to drive deeper analytics. Tackling that market, which could be worth $35 billion by 2025, helped propel the company to a historic IPO in September. But its stock has drifted downward since.

Databricks, which is plotting its own public offering, is wading deeper into Snowflake's territory with a new product that lets customers query data for more basic statistical analyses using SQL, a programming language that Snowflake also relies on.

Meanwhile, Snowflake is laying the groundwork to let its users tap the same analytical data to power artificial intelligence-backed algorithms.

That means the two, which until now were able to largely play nice together in the enterprise-data sandbox, may soon find themselves flinging their toys at each other. But while Ghodsi acknowledged that Snowflake has the advantage right now, he argued that will soon change.

"Operational AI is going to be a much bigger market," Ghodsi told Protocol. "It's not a bigger market right now than data warehousing, but over the next 10 years it will be."

In Ghodsi's view, it's much easier to take a system that can support advanced analytics and infuse the ability to do basic statistical work than trying to tackle it from the opposite direction, which he argued is Snowflake's struggle right now.

Snowflake does offer users several features, like data pipelining, which are important foundations for advanced algorithms. It also recently added support for Java and Python, two of the most popular AI programming languages, in an attempt to bring more data scientists on board. Currently, however, Snowflake's tools are more suited for data analysts — and will likely remain that way for a while.

Snowflake readily admits it isn't trying to replicate Databricks's model. Instead, the company is relying on integrations with AI platforms from Google, Microsoft and AWS, according to SVP Christian Kleinerman.

"Do you have algorithms that are natively hosted by us? No. But it's not because we can't or because we don't know how to. It's because we know the space is very fluid," he told Protocol. "Our entire initiative in AI and ML has been to build extensibility into Snowflake so you can interface with your tool of choice."

Snowflake was able to capitalize on the rush among enterprises to empower more of their employees to access data and conduct more advanced statistical analyses. But building AI models is much more difficult, as it involves training algorithms to begin to draw future predictions or discover unknown correlations from those vast data sets. Regeneron, for example, used Databricks to find a genome for chronic liver disease.

And there's clearly a lot of enthusiasm for Ghodsi's vision. Databricks has raised $1.8 billion — $1 billion of that in February — and is valued at an astonishing $28 billion. (Ghodsi even believes Databricks is undervalued at this point.) The company is also backed by Salesforce, AWS, Microsoft and CapitalG, a venture fund under the Alphabet umbrella alongside Google. Some of those giants have their own AI engines — AWS has SageMaker and Microsoft has Azure ML, for example — so backing Databricks is a good proof point of just how powerful its platform is. It's also an indicator that, while the major cloud providers partner with Snowflake, they may see longer-term value in a deeper relationship with Databricks.

Still, with a market cap of $57 billion, Snowflake is a much larger company. While Databricks's value is likely to skyrocket when it IPOs, Snowflake definitely has the first-mover advantage. And given the time it will take to establish operational AI as a full-fledged market, the company has some runway. There's also a plethora of AI startups Snowflake can pick from and, with its equity and a war chest of $4 billion, it's not short on stock or cash it can use to acquire tech to help support the pivot. The company, for example, recently invested an undisclosed sum in Dataiku and has an equity stake in DataRobot.

The market is ultimately going to be large enough to support both. But most software vendors are never content with second place, which means the fights between Snowflake and Databricks are likely just beginning.

Crypto crackdowns and fintech super apps

Plus, the Coinbase/Robinhood competition heats up.

Photo: Dmitry Demidko /Unsplash

On this episode of the Source Code podcast: Ben Pimentel joins the show to discuss China's aggressive moves against the crypto industry, Robinhood and Coinbase's battle for crypto supremacy, and PayPal's new financial super app. Then Tomio Geron explains what's going on at Binance, and why the largest crypto exchange in the world is under so much regulatory scrutiny.

For more on the topics discussed in this episode:

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.


Keep Reading Show less
Nasdaq
A technology company reimagining global capital markets and economies.

Theranos 'valued PR' over patients, an ex-employee says

Adam Rosendorff said he felt pressured to vouch for tests he did not have confidence in. His testimony appeared to tie Holmes more closely to the lab's failures.

Elizabeth Holmes leaves the San Jose courthouse where her fraud trial is underway.

Photo: Jane Tyska/Digital First Media/The Mercury News via Getty Images

Former Theranos lab director Adam Rosendorff testified Friday that he repeatedly raised the alarm about bad blood tests to then-CEO Elizabeth Holmes, ultimately concluding that the company valued press and funding more than the patients.

"I was very enthusiastic working at Theranos in the beginning. Over time, I came to realize that the company really valued PR and fundraising above patient care, and I became very disillusioned," Rosendorff said on the witness stand inside the San Jose courtroom where Holmes' trial on fraud charges began this month.

Keep Reading Show less
Biz Carson

Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.

Protocol | China

Can NFTs happen in a crypto-less China? Amazingly, yes.

Using clever workarounds, Chinese NFT players are managing to weather a regulatory ban on cryptocurrency.

No matter what workarounds Chinese NFT marketplaces choose, the result is that most NFT transactions in China feel detached from cryptocurrency.

Image: Yu Chun Christopher Wong/S3studio/Getty Images

The NFT craze has come to China, but you can hardly see any trace of crypto in it.

In the past two months, Chinese social media and gaming giant Tencent has built an NFT purchase and collection app, ecommerce platform Alibaba sold 50 NFT mooncakes in a stunt to promote a metaverse product and half a dozen startups are competing to be the winner of the localized non-fungible token trading market in China.

Keep Reading Show less
Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.
Protocol | China

A Chinese ‘game companion’ platform’s phantom shutdown

Bixin said it would shutter its game companion business to keep regulators happy. It looks a lot like business as usual.

China's game companions are becoming even more vulnerable as a result of regulatory scrutiny.

Photo: Johannes Eisele/AFP via Getty Images

In a clear response to regulatory scrutiny, Bixin, China's leading online marketplace for game companions, or peiwan, announced on Sept. 10 that it would "permanently shutter" its controversial peiwan business. But its internal announcement shared with Protocol seems to contradict its public declarations.

This past summer, Chinese authorities issued a slew of regulations aimed at addressing what Beijing considers toxic subcultures and practices that harm the country's minors. Bixin, an app developed by Shanghai Yitan Network Technology Company with 6 million registered game companions, also received its own share of regulatory pressure. Yitan was founded in 2014 and is backed by IDG Capital.

Keep Reading Show less
Shen Lu

Shen Lu is a reporter with Protocol | China. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. She can be reached at shenlu@protocol.com.

Latest Stories