Google targets cybersecurity firm Wiz in record $23 billion deal
Alphabet, the parent company of Google, is reportedly in advanced negotiations to acquire the cybersecurity startup Wiz for about $23 billion, according to sources familiar with the matter.
If successful, this acquisition would be Alphabet’s largest to date and would signal a major strategic shift for the technology giant.
Wiz is one of the fastest-growing software startups in the world. Now headquartered in New York, it specialises in cloud-native cybersecurity solutions, and provides AI-powered, real-time detection, and response. By 2023, Wiz had captured $350 million in revenue and was landing over 40% of the Fortune 100 market.
That deal, which is expected to be finalised soon according to reports, would involve mostly cash payments. The move was made amid a broader backlash against the technology industry, in which governments worldwide are taking steps to examine acquisitions in the tech space more closely. The U.S. government has grown increasingly cautious with these types of transactions under the Biden Administration, rendering Alphabet’s efforts to expand much more aggressive compared to other tech deals currently being pursued in America.
Consider how well Wiz has been growing and its recent market placement. The company last closed a $1 billion private round at a valuation of $12 billion. Having worked with top enterprises like Morgan Stanley and DocuSign, Wiz has solidified its reputation in the cybersecurity realm. Boasting a roster of more than 900 employees located across the U.S., Europe, Asia, and Israel, the company plans to add another 400 global workforce members by the end of the fiscal year 2024.
According to industry analysts, the acquisition is seen as a strong strategic investment for Alphabet to strengthen the ranking and position of Google Cloud Platform (GCP) in the competitive industry. Ray Wang, principal analyst and founder of Constellation Research, stated that the cloud security sector is currently very dynamic, and Google could steal customers from AWS and Azure with the purchase of Wiz.
This likely ranks at the top in terms of potential market positioning impact, noted Pareekh Jain, CEO of Pareekh Consulting, as this acquisition could significantly differentiate Google in the cloud security sector. With this many instances in which cybersecurity eventually becomes compromised, it could even become another variable that enterprises weigh when deciding whether moving to the cloud is worth their while.
The deal would give Google a leg up as it seeks to decrease its reliance on online advertising revenue and remain competitive. Given that AI and security are two of the most significant areas of technology investment, Google might consider leveraging the chance to develop its own capabilities in these fields.
It also adds to Google’s cybersecurity-related acquisitions, which have included a $5.4 billion purchase of Mandiant, and the acquisition of Siemplify. This would be the first time a potential Wiz acquisition is on such a different scale.
Dealmaking in the broader technology sector has picked up this year. Synopsys’ purchase of Ansys for around $35 billion, and Hewlett Packard Enterprise’s purchase of Juniper Networks for $14 billion were high-profile transactions. Dealogic data show that mergers and acquisitions channelled $327.2 billion into the technology industry during the first half of this year, recording a 42 per cent year-on-year increase.
There is more to follow in this story, so stay tuned for regulatory responses and potential impacts on competition, particularly around cloud services and cybersecurity. The result of this potential buyout could have major implications for the expected strategies of the technology industry in cloud computing, AI, and cybersecurity as well.
(Photo by Mitchell Luo)
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