Google’s parent company, Alphabet, is reportedly in advanced negotiations to acquire the cybersecurity startup Wiz for approximately US$23 billion, according to Reuters. If the deal materializes, it would mark Alphabet’s largest acquisition to date.
The potential Alphabet Wiz acquisition, primarily funded in cash, could be finalized soon. Wiz, originally founded in Israel and now headquartered in New York, has rapidly emerged as one of the fastest-growing software startups globally. The company specializes in cloud-based cybersecurity solutions, offering real-time threat detection and response capabilities powered by artificial intelligence.
Wiz’s Financial Performance and Clientele
Should Alphabet proceed with this acquisition, it would represent a notable move amidst the current climate of heightened regulatory scrutiny of major technology companies under President Joe Biden’s administration. In recent years, U.S. regulators have shown increasing resistance to large tech companies expanding through significant acquisitions.
In 2023, Wiz generated approximately $350 million in revenue and collaborates with 40% of Fortune 100 companies, according to information on its website. The company recently raised $1 billion in a private funding round, which valued it at $12 billion.
On reaching out for comments, both Alphabet and Wiz have not yet responded to The Cyber Express Team’s requests on the potential deal.
Wiz collaborates with multiple cloud service providers, including Microsoft and Amazon, and boasts a client roster that includes Morgan Stanley and DocuSign. With a workforce of 900 employees spread across the United States, Europe, Asia, and Israel, Wiz has previously announced plans to expand its global team by an additional 400 employees in 2024.
Strategic Decisions of Alphabet
Interestingly, Alphabet recently decided against pursuing a takeover of the online marketing software company HubSpot.
The broader technology sector has seen an uptick in dealmaking activity this year. In January, design software company Synopsys (SNPS.O) agreed to acquire its smaller rival Ansys for around $35 billion. Additionally, Hewlett Packard Enterprise (HPE.N) struck a deal to purchase networking gear maker Juniper Networks (JNPR.N) for $14 billion.
Technology has accounted for the largest share of mergers and acquisitions during the first half of the year, with activity surging over 42% year-on-year to reach $327.2 billion, based on data from Dealogic.
Moreover, The New York Times reports that Google is pushing forward with the Wiz acquisition despite potential regulatory hurdles. The company appears willing to challenge any opposition to enhance its cloud-computing division, which currently trails behind Amazon Web Services and Microsoft Azure.
Google faces two antitrust lawsuits from the Justice Department, targeting its search engine dominance and digital advertising-technology business. A verdict in the search case is expected this summer. The Biden administration has taken a firm stance against major tech acquisitions, blocking several high-profile deals including Penguin Random House’s $2.18 billion acquisition of Simon & Schuster and JetBlue’s $3.8 billion purchase of Spirit Airlines. Amazon also abandoned its $1.7 billion acquisition of iRobot due to regulatory pushback.
In recent years, Google has been striving to diversify its revenue sources beyond online advertising, with search, YouTube, and other platforms still accounting for 75% of its income. The acquisition of Wiz, while not an immediate game-changer, would enhance Google Cloud’s capabilities and strengthen its ties with companies relying on Wiz for security across AWS, Azure, and other cloud services.
Historically, Google has been cautious with large acquisitions. After buying Motorola for $12.5 billion, it sold the company to Lenovo at a loss less than two years later. More recently, in 2021, Google acquired Fitbit for $2.1 billion, a deal that faced regulatory scrutiny before approval.
Google has made several strategic acquisitions to enhance its cloud computing offerings. In 2022, it purchased Mandiant, a cybersecurity firm, for $5.4 billion, and Siemplify, another cybersecurity company. Thomas Kurian, CEO of Google Cloud, has been a driving force behind the push to acquire Wiz, aiming to make cybersecurity a key strength of Google Cloud. Wiz’s services would help corporate clients like BMW, Slack, and Morgan Stanley mitigate security risks associated with cloud computing.
If the deal goes through, it would signify a bold step in Alphabet’s growth strategy amidst a challenging regulatory landscape.