Algorithms will be Big Business – 4/4/13

After Yahoo Acquires Summly, Is Buying Math The Next Tech Bubble?

Algorithms will be Big BusinessThe news of , the news-summarizing app created by 17-year-old British wunderkind Nick D’Aloisio, rippled through the news world on Tuesday.

The acquisition, while notable for going to an entrepreneur so young, is hardly or . The app had millions of downloads after its November release, but it had no real monetization strategy. And unlike, say, Facebook buying Instagram and leaving it intact, Yahoo said it is killing the app (in fact it is already gone from the iOS App Store); so Yahoo isn’t buying an audience or a user base, either.

What the Internet company appears to be taking a big gamble on is a good story, some young talent and an algorithm. It bought math.

While Yahoo did not disclose the amount of the deal, of All Things D that it was “about $30 million … 90 percent in cash and 10 percent in stock.” She says the purchase is part of the restructuring under new CEO Marissa Mayer and her plan to bolster Yahoo’s mobile efforts.

Increasingly, technologies, like finance, and, in Summly’s case, news aggregation, are becoming algorithm based; an algorithm simply being a set of step-by-step instructions to produce an output. So could these algorithms, math essentially, be the next tech bubble?

In his , Christopher Steiner, author of Automate This: How Algorithms Came to Rule Our World, said, “The story of the next 20 years is the story of big data and algorithms.”

Including finance and the tech world, algorithms and algorithmic science is already finding heavy use in medicine, sports and the music industry, Steiner says, and that is only going to increase.

“Just how much will we allow algorithms to take over?” Steiner wonders.

Part of that might depend on whether other companies follow Yahoo’s lead and begin doling out large payouts for algorithms that solve their problems. One can posit a future in which computer science and math students simply create and sell algorithms, and not products, to the highest bidder. Why go through the trouble of bringing an app to market when you can just sell the science?

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