The Telegraph My details My newsletters Logout Upgrade to Premium My details My newsletters Logout The Telegraph Twitter pays $150m for London AI startup Magic Pony Magic Pony has been acquired by Twitter Credit: Peter Matthews, Balderton Capital 20 June 2016 • 3:03pm Twitter has acquired London artificial intelligence startup Magic Pony for around $150m (£102m), according to sources close to the company.
 The startup, founded by graduates of Imperial College London uses machine learning to create high-quality videos from grainy footage, and will likely be integrated into Twitter's live and video services such as Periscope and Vine.
 Accounts from Companies House suggest the two co-founders Rob Bishop and Zehan Wang owned just over half of the company shares, which would stand to make them close to $75m.
 The acquisition builds on previous investments made by Twitter in machine learning, and is the third British startup to be bought by the microblogging service.
 "Machine learning is increasingly at the core of everything we build at Twitter," said chief executive Jack Dorsey.
 "Magic Pony’s technology – based on algorithms that can understand the features of imagery – will be used to enhance our strength in live and video.
" We’ve acquired Magic Pony Technology to enhance our machine learning — Twitter (@twitter) 20 June 2016 The startup's team of 14 includes 11 PhDs and has received an undisclosed sum of investment from Entrepreneur First, Octopus Ventures and Balderton Capital, whose basement the company launched from.
 The Magic Pony team will remain in the UK, where it will form the basis of Twitter’s AI research team in Europe, according to chief executive Jack Dorsey.
 CEO Rob Bishop will move to California.
 "Some worry that we are suffering from a brain drain, with our universities producing world-class researchers who end up at West Coast powerhouses.
 I happen to think this view is phenomenally short sighted," said Suranga Chandratillake, partner of Balderton Capital who invested in Magic Pony Technology in 2015.
 "It is, instead, a huge opportunity for Europe to be at the heart of the artificial intelligence revolution and do it off the back of US investment.
" What Magic Pony does According to a previous interview by Rob Bishop, the startup's CEO, the patented technology can enhance image quality, particularly video captured on mobile phones in poor lighting conditions.
 It could also make pixelated images sharper, for instance in a live video or a game.
 Video quality is increasingly important for the major social media apps such as Twitter, Facebook and Snapchat, who have to compress videos heavily in order to stream them quickly and on different devices.
 For instance, Google's machine learning team in Zurich is also working on using machine learning to improve videos.
 According to Emmanuel Mogenet, head of Google Research Europe, Google scientists are developing tools to look at visual and soundtrack information and not just text descriptions of YouTube videos, in order to categorise and recommend them better.
 Machine learning is already used to enhance YouTube videos by improving auto-stabilisation and pixel quality.
 Silicon Valley's got its eye on British AI Magic Pony is the latest in a string of AI and machine learning startups in Britain that have taken the fancy of large Silicon Valley companies.
 In 2012, Amazon acquired Evi Technologies, a Cambridge-based startup whose platform can understand and communicate in natural language, making it a super-intelligent search tool.
 Meanwhile, Apple made an extremely similar Cambridge-based acquisition – it bought VocalIQ, a software system that teaches computers to speak more like humans.
 More recently, Microsoft acquired smart keyboard startup Swiftkey for $250m and Google paid £400m for DeepMind, which recently achieved a world-first by designing a computer algorithm that beat a human champion at the Chinese board game Go.
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