GitLab users cautiously optimistic on Datadog DevSecOps deal
Datadog is reportedly a suitor for GitLab; existing users understand the rationale for such a deal, but key questions must be answered before they'd adopt deeper integrations.
GitLab customers this week digested a report that the DevSecOps vendor is seeking a buyer and that Datadog is among potentially interested acquirers with some hesitation, but remained open to the possible benefits of the combination.
According to a June 17 Reuters report that cited anonymous sources, GitLab "is exploring a sale after attracting acquisition interest," and observability vendor Datadog is among potentially interested buyers. Google's parent company, Alphabet, has a 22.2% voting stake in GitLab, according Reuters, and some Wall Street analysts suggested Google might also be a potential acquirer, along with IBM. Alphabet has also reportedly been in talks to acquire cybersecurity startup Wiz for $23 billion and martech company HubSpot, both of which fizzled.
GitLab acquisition talks are in early exploratory stages, according to Reuters sources.
"Any deal is still weeks away and no agreement is certain," the report stated. No estimate of the financial terms of the deal has been reported.
While the numbers add up -- Datadog has a $41.15 billion market capitalization, according to Google Finance, while GitLab's is $8.42 billion, this merger would be a "mighty large bite" for Datadog if it goes forward, said IDC analyst Jim Mercer.
"In the long term, it could benefit enterprise customers by providing them with access to a platform that can build, secure, deliver and run their applications," Mercer said. "However … I suspect there would be some indigestion pulling the two companies together."
GitLab users have integration, pricing qualms
For one joint customer of both companies, the reported deal was initially a head-scratcher, but the possibilities became clearer on further consideration.
"It was a bit of a surprise, but I did think about it, and it actually makes sense," said Maarten Smeets, vice president of cloud at PaaS provider Mendix, which uses GitLab's DevSecOps pipelines and consolidated its observability tooling onto Datadog three years ago. "Datadog is looking for a bigger footprint, especially in enterprises, and for them, shifting to the left in the application development process makes a lot of sense because it also drives consumption [of Datadog's application performance monitoring tools]. … It would also give them access to assets they normally do not have access to by default, like code repositories and pipelines."
Smeets said he could also see the potential benefit of pushing Datadog's observability alerts and findings back to developers at the design phase of applications, fully closing the DevOps feedback loop. But whether he would deploy such a combined toolset would depend heavily on what the integration process looks like, he said.
"It would be worth looking into," Smeets said. "But the best value Datadog brings us is reducing incident triage time. If I can bring that back to point to an actual code change, module or infrastructure as code bit directly, that would be very helpful."
Another GitLab user said he hoped that being combined into a larger entity would help the DevSecOps vendor lower its prices to beat Microsoft and GitHub.
For example, both offer unlimited public and private code repositories in their free tier, but GitHub includes 2,000 minutes of GitHub Actions CI/CD jobs per month for public repositories, while GitLab includes 400 pipeline minutes per group per month for private and public repositories. GitHub also offers access to project management features in its free tier, which GitLab lists as part of its $29 per user per month Premium subscription.
"So far we have most of our custom tooling built on GitLab, but those can be moved to GitHub easily if required," said Anuj Tyagi, a senior site reliability manager at a communications company he requested not be named. "GitHub offers a lot of features in [its] free tier because [it] can afford to minimize [its] profits after the Microsoft acquisition. They are trying to break competitors. Jenkins is already considered old. ... GitLab is on sale now. So, slowly they are winning the race for future."
Right now, Tyagi said, his company uses GitLab for pipeline orchestration but with its own runners, and it doesn't use any of its premium security scanning or project management features.
A merger with Datadog "can be [beneficial], if they make changes in licensing and features," Tyagi said.
Smeets said he isn't interested in either Datadog or GitLab for security automation.
"As a [service provider], I'm always going to use best of breed security tools -- we use Snyk, Veracode, things like that," he said. "I would be looking more for how GitLab and Datadog can work with these through connectors than their own offerings right off the bat."
Observability vendors seek DevSecOps expansion
By acquiring a DevSecOps platform such as GitLab, Datadog would also be able to match features offered by observability rival Dynatrace, which can trigger cloud infrastructure orchestration and CI/CD pipelines through its Cloud Operations and AutomationEngine tools. Both Datadog and Dynatrace have expanded over the last five years into security observability and automation, another natural area of overlap between Datadog and GitLab.
Datadog has been aggressive in expanding its business through acquisition already, said IDC's Mercer, having made 10 acquisitions over the last five years.
"None of them have been nearly as large as GitLab," Mercer said. "[But] GitLab gives [Datadog] a strong presence with developers and could enable them to be a much bigger player who controls both the dev and ops sides of the DevOps pipeline."
Beth Pariseau, senior news writer for TechTarget Editorial, is an award-winning veteran of IT journalism covering DevOps. Have a tip? Email her or reach out @PariseauTT.
