Datadog acquisition gives it feature flagging for AI
The move enables the vendor to integrate the startup's feature flagging software into its products. It is the second acquisition the vendor has made in the past few weeks.
Cloud IT monitoring vendor Datadog's purchase of feature flagging and data experimentation startup Eppo further expands the vendor's platform's range of capabilities following its recent acquisition of AI observability vendor Metaplane.
Feature flagging is a technique that enables enterprises to deliver software to users safely and quickly. With the method, companies can gradually fix bugs or problems in code without redeploying new features. For emerging AI applications, the technology can help enterprises roll out AI features more controllably.
Eppo was founded in 2021 by former Airbnb data scientist Chetan Sharma. The company announced in August that it had raised about $28 million, bringing its valuation to more than $130 million.
Meanwhile, Datadog, founded in 2010, is based in New York. It raised more than $794 million over its last few funding rounds. The vendor's acquisition of Metaplane last month gave it a platform to help organizations build reliable data and AI systems for DevOps and DataOps.
With the acquisition of Eppo, revealed Monday, Datadog said it will integrate Eppo's capabilities into Datadog Product Analytics, Real User Monitoring and Session Replay so teams can test changes, analyze user behavior and measure the business effect of code releases.
Natural progression
The acquisition of Eppo is a natural progression for Datadog, said Gregg Siegfried, an analyst at Gartner.
Datadog has been doing this for a while.
Gregg SiegfriedAnalyst, Gartner
"Datadog has been doing this for a while," Siegfried said. "They've got a formula. They know what they're doing when they expand their platform like this."
Datadog has a reputation for hiring early startups, and the acquisition of Eppo enables it to add the feature flagging capability, which it didn't have previously.
The vendor also has a growing opportunity to help buying centers (groups within enterprises that decide whether to buy a product or service) and help them drive more software efficiencies, said Stephen Elliot, an analyst at IDC.
"It follows along with the trajectory of how Datadog thinks about expanding their product portfolio, but also expanding their reach into new buying centers," Elliot said.
He added that feature flagging is an essential technique in the age of agentic AI.
"As we think about AI-driven applications, there's going to be more and more complexity, deployment, and understanding the role of governance, security, data ingestion and data quality," Elliot continued. "If feature flagging helps with the quality of application software, it's certainly going to expand into agentic AI or AI-led application development."
While Datadog remains one of the top IT monitoring vendors, it still faces competition from vendors including Dynatrace, Splunk, Sumo Logic and AppDynamics. Dynatrace also has feature flagging capabilities with OpenFeature, a standard for feature flag management.
"It's a competitive space," Elliot said.
Most of the vendors in the market have started to focus more on bringing more features under a single platform, he noted.
However, Datadog has long operated by layering different capabilities inside of its platform so that customers can continue to expand inside one single platform instead of buying the capabilities from different places, he added.
Esther Shittu is an Informa TechTarget news writer and podcast host covering artificial intelligence software and systems.
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