Twitter Harnesses Magic Pony Technology to Boost Video Quality

Paid $150 Million to Acquire U.K. Artificial Intelligence Startup

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Twitter agreed to acquire a London-based artificial intelligence startup to make tweeted live videos look more professional.

In a blog post Monday, Twitter Chief Executive Officer Jack Dorsey said he was buying Magic Pony Technology "so Twitter can continue to be the best place to see what's happening and why it matters, first."

Seeking to shore up slowing growth, the social media company has in recent months begun emphasizing video on its site. Magic Pony uses machine learning, a way of teaching software to perform tasks without explicit programming instructions based on pattern recognition, a technology that's "increasingly at the core of everything we build at Twitter," Mr. Dorsey said.

Twitter paid about $150 million for Magic Pony, according to a person familiar with the matter. The terms of the deal, which were not disclosed by Twitter, were previously reported by Tech Crunch.

Magic Pony's technology uses artificial intelligence for visual effects. It can be used to clean up pixelated images or create new images. It can be used to improve video streaming -- especially in environments where bandwidth and connectivity isn't ideal -- or to automatically build landscapes for computer games.

The company, created in 2014 by graduates from Imperial College London with backgrounds in computer vision, mathematics and neuroscience, trains neural networks to process visual information. The network can be taught to learn what a high-quality image looks like when converted to a lower-quality image and then can reverse this process, taking poor-quality images and turning them into high-quality ones. Magic Pony's technology can do this using a standard graphics processor, meaning it could be used by all sorts of devices, from desktop computers to smartphones.

Before the Twitter acquisition, Magic Pony was backed by 4.3 million pounds ($6.31 million) in funding, according to public filings, including two investment rounds from London-based Octopus Ventures in July 2015 and May 2016. London venture firm Balderton Capital also was a backer. The company was valued at 21 million pounds in its last financing round in May 2016.

"We are always looking for unusually talented teams and entrepreneurs," said Octopus investment director Luke Hakes. "The guys have built a whole suite of capabilities all around machine learning and visual processing."

Many of Twitter's competitors, including Facebook and Snapchat, are also sharpening their focus on video. In an attempt to keep up, Twitter has recently been emphasizing its ability to broadcast live events, including its Periscope video service, and earlier this year made a deal with the National Football League to broadcast its Thursday night games alongside relevant tweets. Twitter has been looking to do similar deals in sports, entertainment and politics.

The acquisition of Magic Pony builds on other investments in machine learning, beginning with the purchase of Madbits in July 2014 and Whetlab in June 2015.

-- Bloomberg News

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