Google is on the verge of its biggest acquisition ever, as its parent company
Alphabet is in advanced discussions to purchase the fast-growing cybersecurity
startup Wiz for approximately $23 billion. This information, confirmed by a
source familiar with the matter, signifies a significant move by Google into the
cybersecurity space.
Google's Potential $23 Billion Acquisition (iStock)
The potential deal would surpass Google's previous largest acquisition, the
$12.5 billion purchase of Motorola about a decade ago, which the company later
sold at a substantial loss. A $23 billion price for Wiz almost doubles the
startup's most recent valuation of $12 billion from its latest funding round
earlier this year.
Wiz, founded in March 2020 during the Covid-19 pandemic, has seen rapid
growth. Based in New York City, the company claims that 40% of Fortune 100
companies are among its clients. Notable customers include BMW, Slack, and
Salesforce, and it collaborates with major cloud providers such as Amazon,
Microsoft, and Google. The four founders, Assaf Rappaport, Ami Luttwak, Yinon
Costica, and Roy Reznik, all met during their time in Unit 8200, the cyber
intelligence division of the Israel Defense Forces.
The discussions between Google and Wiz began after the cybersecurity startup
raised $1 billion from venture capital investors earlier this year. However,
the terms of the potential deal have not been finalized, and the talks could
still fall through.
If the acquisition goes through, it would be a clear indication of Google's
commitment to strengthening its cybersecurity offerings, particularly in cloud
computing. Dan Ives, managing director and senior equity research analyst at
Wedbush, noted that this move would be a significant signal to competitors
like Microsoft and Amazon, showcasing Google's serious investment in
cybersecurity to bolster its cloud services.
Google Cloud has been central to Alphabet's efforts to diversify its revenue
beyond its core search advertising business. Despite growth in cloud sales,
Google has faced tough competition from Microsoft and Amazon in this sector.
Acquiring Wiz would enhance Google's ability to help companies address cyber
threats more effectively.
The news of the Google-Wiz discussions was initially reported by The Wall
Street Journal. When contacted by CNN, neither Google nor Wiz provided
comments on the matter.
This potential acquisition comes amidst intense antitrust scrutiny of major
tech companies under the Biden administration. However, Ives suggested that if
Trump were to regain the presidency, the Federal Trade Commission's stance
might soften, potentially accelerating mergers and acquisitions in the tech
industry.
In March 2022, Alphabet acquired cybersecurity firm Mandiant for $5.4 billion
as part of its strategy to enhance its cybersecurity capabilities. The
importance of cloud security has been underscored by recent events, such as a
major breach at AT&T that exposed call and text records of nearly all its
wireless customers due to an illegal download on a third-party cloud platform.
As the talks progress, the tech industry is closely watching to see if this
landmark deal will be finalized, marking a significant exit for Wiz and its
founders.