Snowflake Acquires Observe Amidst Service Outages, Highlighting Cloud Reliability Challenges

Snowflake has acquired telemetry data platform Observe in a bid to help enterprises anticipate and prevent IT outages, the company announced this week. The move comes as Snowflake itself grapples with recurring service disruptions, including a "major outage" on the very day the acquisition was revealed.

Analytics leader Snowflake positions this acquisition as a solution to enterprises' growing struggle with IT observability. As Snowflake's Head of Analytics Carl Perry explained, organizations often discard valuable telemetry data due to prohibitive storage costs, leaving them blind to looming system failures. "People lose visibility into critical data because they just can’t afford to store it," Perry stated. Observe addresses this by leveraging cloud storage's scalability and affordability, building specialized observability tools atop Snowflake's data platform.

The timing highlights a painful irony: While announcing Observe's technology as an outage-prevention solution, Snowflake simultaneously reported two operational incidents. One caused degraded performance in Snowsight (Snowflake's web interface), while another triggered a complete service outage for customers in its Azure West region. Each lasted under two hours according to Snowflake's status page – part of a pattern that includes six other documented outages since November 2025.

For enterprises, such disruptions carry significant regulatory and financial stakes. Under frameworks like GDPR and CCPA, organizations face strict requirements for data availability. Outages blocking access to personal data could violate Article 15 (right of access) or impede breach response timelines, potentially triggering fines up to 4% of global revenue. Service-level agreements (SLAs) also typically mandate compensation for downtime, while stock exchanges may penalize public companies for delayed financial reporting caused by IT failures.

Observe brings proven capability to this challenge. Before acquisition, the platform processed 150 petabytes of telemetry data for major enterprises, tripling revenue and doubling its customer base within a year. Clients include SaaS providers and AI-native companies that migrated from rivals like Splunk and Datadog. Perry acknowledged the acquisition's timing amid Snowflake's operational struggles: "Running a service in the cloud and being as transparent as possible can be painful at times," he said, emphasizing that detailed incident reporting ultimately builds trust despite short-term discomfort.

The deal signals a strategic shift in cloud infrastructure priorities. As AI integration expands application complexity, Perry notes observability has become "an even bigger need now than in the past." Snowflake hasn't disclosed financial terms or integration timelines but confirmed its prior investment in Observe's recent $156 million funding round.

For customers, the acquisition promises cost-efficient telemetry retention and proactive outage mitigation. However, Snowflake's transparency about its own incidents – contrasted with rival Databricks' vague incident reports requiring support tickets – sets a crucial precedent. In an era where minutes of downtime can breach compliance and erode user trust, this move underscores that observability isn't just technical necessity but fundamental to digital rights: the right to reliable service, data access, and corporate accountability when systems fail.