IBM plans to create an integration between AlchemyAPI's technology and its Watson AI platform as a way to enhance the API's ability to quickly determine hierarchies and relationships in huge data sets.

The technology obtained with the acquisition will most likely be integrated into the Watson Analytics service, which became publicly available in late 2014.

AlchemyAPI is a startup company that uses "deep learning," an artificial intelligence, when making a number of inferences on images and text. It is one of several computing types the company can perform. It is also the type that has caught attention from IBM, which seeks to distinguish itself from the rest of the cloud service-providing companies.

IBM's acquisition of AlchemyAPI is by far the company's latest big investment in the field of deep learning technology. Apart from boosting Watson's "cognitive" computing system and seeing the deal as a major revenue source in the future, IBM believes the move will result in the creation of a wider range of available cognitive computing APIs to its customers. These will include data detection and extraction from images, visual recognition and language analysis.

"I think we're going to see more consolidation, quite honestly," said Elliot Turner, AlchemyAPI's founder and CEO. "You're going to have a whole variety of primitives to, for example, understand language, speech, conversations, video processing and speech synthesis, allowing folks to combine these things like Lego blocks to build new and interesting applications that automatically generate combinatorial effects."

Stephen Gold, VP at IBM Watson Group, said that the startup company has the ability to process billions of API calls in every month, reaching 36 countries and using eight languages. Moreover, IBM sees the company as a strong competitor to the Watson platform. The deal takes the startup company out of the race and allows IBM to acquire its existing technology and community altogether.

"From a technology perspective, AlchemyAPI's deep learning platform will augment Watson's ability to identify information hierarchies and understand relationships between people, places and things across both structured and unstructured data," said Gold.

Gold added that the acquisition allows the company to take advantage of the startup's visual recognition technology, which is currently not included in the Watson platform.

"AlchemyAPI has advanced visual recognition technology that can automatically detect, label and extract important details from image data," he said.

Founded in 2005, AlcheymyAPI was formally launched in 2009. Four years later in February, the startup received a total of $2 million in one Series A funding round.

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