A, Google's parent company, is shutting down its own biggest acquisition ever, buying the cybersecurity startup Wiz for approximately 23 billion dollars. According to Wall Street Journal, Alphabet is close to finalizing the deal, although there is still room for a possible failure of the negotiations at the last moment.
The acquisition of Wiz would be an acquisition of great strategic importance and with significant impacts on the digital sector at a time when large technology companies have reduced their acquisition activities below the pressure from antitrust authorities.
Antitrust risk to overcome
Il WSJ points out that if Alphabet goes ahead with the acquisition attempt, it will, however, have to deal with theBiden administration's aversion to mega-deals. Regulators are tough on big tech companies that threaten to grow only through acquisitions.
Google is currently awaiting a verdict in a Justice Department antitrust lawsuit, accusing it of using illegal means to strengthen its dominance in internet search. Last year, the agency filed a second antitrust lawsuit, which has yet to go to trial, accusing Google of unfair practices in the ad-tech business.
Google's largest acquisition occurred in 2011, when it purchased Motorola Mobility for 12,5 billion dollars with the unanimous approval of the boards of directors of the two companies. In 2014, Google it then sold Motorola Mobility to Lenovo for 2,91 billions of dollars.
What is Wiz
Wiz was founded in Israel in 2020 by Assaf Rappaport and a team of colleagues, including Ami Eden, Yin Yin Ng and Lior Wiener. Before founding Wiz, the co-founders sold their first startup, Adallom, to Microsoft for $320 million in 2015. After working for Microsoft for a few years, they launched Wiz with the goal of revolutionizing cybersecurity in the cloud.
Wiz quickly gained notoriety as one of the sFastest growing software startup globally. Specializing in cloud-based cybersecurity solutions, Wiz offers advanced technologies for real-time detection and response to cyber threats, powered by artificial intelligence. Its advanced technology uses AI to analyze large amounts of data in real time, identifying potential vulnerabilities and ongoing attacks.
In 2023, the startup reported revenues of $350 million and works with 40% of the Fortune 100 companies. Recently, it raised 1 billion dollars during an investment round, reaching a valuation of $12 billion. To accelerate its growth, Wiz has undertaken several strategic acquisitions. In April, for example, it acquired Gem Security to improve its detection and response capabilities in the cloud.
With Wiz, Alphabet catches up in cloud computing
The acquisition of Wiz would represent a strategic move for Alphabet, which aims to boost its cybersecurity capabilities. Google has already shown a strong interest in the sector, as highlighted by theacquisition of Mandiant in 2022 for $5,4 billion. Integrating Wiz into its portfolio will allow Alphabet to deliver more robust security solutions to its cloud customers.
Although Google is a leader in online search and advertising, it is still behind Amazon and Microsoft in the cloud computing market. However, revenue from Google's cloud business grew 26% last year and the unit posted an operating profit for the first time.
The acquisition of Wiz would help the Mountain View company fill this gap and compete more effectively in the industry. Cloud computing is a rapidly growing area, also fueled by the boom in artificial intelligence, which requires powerful cloud infrastructures to operate.
It is not the first move that Alphabet has made in the sector, it already tried last year when it attempted to acquire Hubspot, a CRM software provider, for $35 billion, but without reaching advanced talks.
Cybersecurity: a growing sector
The cybersecurity sector is constantly growing, driven byincrease in cyber threats globally. Companies are always becoming more aware of the importance of protecting one's data and infrastructure, thus increasing the demand for advanced cybersecurity solutions that leverage technologies such as artificial intelligence and data analytics.
At the same time, the market for technological acquisitions is booming. A trend highlighted by operations such as theCisco's acquisition of Splunk for $28 billion and Hewlett Packard Enterprise's purchase of Juniper Networks for $14 billion.