Google to acquire cybersecurity startup Wiz for $23 billion, aiming at cloud computing market

Google to acquire cybersecurity startup Wiz for $23 billion, aiming at cloud computing marketJuly 15, sources revealed that Alphabet, Google's parent company, is in talks to acquire cybersecurity startup Wiz for approximately $23 billion. If completed, this deal would be Alphabet's largest acquisition ever

Google to acquire cybersecurity startup Wiz for $23 billion, aiming at cloud computing market

July 15, sources revealed that Alphabet, Google's parent company, is in talks to acquire cybersecurity startup Wiz for approximately $23 billion. If completed, this deal would be Alphabet's largest acquisition ever. Sources suggest that an agreement is likely to be reached soon, barring any unexpected developments.

This acquisition will provide Alphabet with a powerful boost in its cloud computing endeavors. The cloud computing market has been rapidly expanding in recent years, becoming a key battleground for tech giants. Alphabet has been lagging behind Amazon and Microsoft in this space, and this acquisition will help them bridge the gap.

Founded in 2020 by CEO Assaf Rappaport and several partners, Wiz specializes in providing cybersecurity software for cloud computing and has quickly gained favor in the capital markets. Earlier this year, Wiz secured $1 billion in funding, reaching a valuation of $12 billion, making it one of the few startups outside the artificial intelligence sector to witness an increase in valuation.

Wiz's success can be attributed to its rapidly growing business. The company reported achieving $100 million in annual recurring revenue just 18 months after its inception, which grew to $350 million by 2023. Wiz is backed by several well-known Silicon Valley venture capital firms, including Sequoia Capital, Andreessen Horowitz, Index Ventures, and Lightspeed Venture Partners.

This acquisition will offer a rare opportunity for these investors to exit their investments. This comes amid a stagnant IPO market and an antitrust environment that makes startups less willing to pursue mergers and acquisitions.

Following their $320 million sale of their first startup, Adallom, to Microsoft in 2015, the founders of Wiz worked at Microsoft for several years before departing to launch Wiz. Headquartered in New York, Wiz also has offices in other parts of the United States and Israel. According to its website, the startup has established partnerships with some of the largest cloud service providers, including Amazon, Microsoft, and Google.

Despite its market capitalization exceeding $2 trillion, Google has been relatively conservative in its acquisition strategy in recent years compared to other tech giants. Unlike Microsoft's monumental acquisitions of LinkedIn for $26 billion and Activision Blizzard for $75 billion, Google has made fewer such large-scale acquisitions. The acquisition of Wiz would surpass Google's previous largest acquisition, the $12.5 billion purchase of Motorola Mobility in 2012.

Google also acquired Fitbit in 2021 for $2.1 billion, a transaction that faced regulatory hurdles after it was announced. Additionally, Google acquired Nest Labs for $3.2 billion in 2014. In the past few years, Google has also completed significant acquisitions of YouTube, DoubleClick, Looker, and Waze.

Google has been strengthening its cybersecurity business in the cloud computing space. Its most recent large-scale acquisition was the purchase of security company Mandiant for nearly $5.4 billion two years ago, making it the second largest acquisition in Google's history.

This acquisition is poised to be one of the largest tech deals in recent times. Antitrust scrutiny and high interest rates have kept many potential buyers on the sidelines. Nonetheless, cybersecurity remains a key focus area for deals globally. Earlier this year, Cisco acquired cybersecurity and analytics company Splunk for $28 billion.

Acquisition Context:

• Alphabet has been lagging behind Amazon and Microsoft in the cloud computing space; this acquisition will help bridge the gap.

• Wiz has rapidly emerged as a leader in cloud computing cybersecurity and gained recognition in the capital markets.

• The changing economic environment has led to a subdued IPO market, making M&A a more attractive exit option for startups.

Significance of the Acquisition:

• Provides a strong boost to Alphabet's cloud computing business.

• Enhances Alphabet's cybersecurity capabilities.

• Represents one of the largest tech deals in recent times, signaling the continued focus of investments in the cybersecurity sector.

Regulatory Challenges:

• Regulators may scrutinize Alphabet's acquisition for antitrust concerns and could potentially require the divestiture of certain assets.

Future Outlook:

• The acquisition is expected to be completed in the coming months.

• As the cloud computing market continues to evolve, the cybersecurity sector will remain a focal point for investor interest.

• Alphabet will likely continue to make strategic investments and acquisitions in the cloud computing sector to solidify its market position.

Note: The above information is for reference only. Official announcements should be consulted for accurate details.