Google’s parent company, Alphabet, is acquiring cloud security startup Wiz for between $32 billion and $33 billion, marking the largest acquisition in Google’s history. The deal is expected to be announced imminently.
Wiz to maintain independence post-acquisition
Wiz will operate as an independent platform, providing services across various cloud providers, not limited to Google Cloud Platform. There are plans for increased hiring and potential further acquisitions as part of Wiz’s growth strategy.
Wiz currently generates $700 million in annual recurring revenue. The acquisition has been likened to Microsoft’s purchase of LinkedIn, in terms of maintaining autonomy within a larger organization.
Regulatory and other approvals are still required before the acquisition is finalized. Although both companies have yet to confirm the deal officially, multiple outlets are reporting its completion. Google’s previous largest acquisition was Motorola Mobility for $12.5 billion in 2011.
Prior to this agreement, negotiations for the acquisition had been ongoing for nearly a year, initially peaking at an estimated $30 billion price tag earlier this week. Thomas Kurian, CEO of Google Cloud, has played a significant role in the negotiations, aiming to enhance Google’s cloud security offerings.
Last year, Google proposed purchasing Wiz for $23 billion, but talks stalled over antitrust concerns and issues related to Wiz’s operational autonomy. At that time, Wiz was valued at $12 billion following a $1 billion funding round.
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With the change in the U.S. presidential administration, some speculate that the regulatory environment may now be more favorable for large tech acquisitions, such as this one.
Google aims to bolster its position in the enterprise cloud market, where it has struggled against competitors like AWS and Microsoft Azure. The acquisition of Wiz supports this objective as Wiz provides AI-driven cybersecurity solutions that help businesses address critical risks.
Wiz, one of the fastest-growing software startups, was valued at $12 billion during a funding round last May. Following the earlier acquisition discussions with Google, Wiz instead considered an initial public offering and focused on increasing recurring revenue following a secondary sale at a $16 billion valuation.
Wiz’s rapid expansion continues, with expectations to double its annual recurring revenue to $1 billion this year, bolstered by its partnerships with major cloud providers, including AWS, Microsoft Azure, and Oracle, and its client base, which includes notable names like Morgan Stanley, BMW, and LVMH.
Shares of Google experienced a minor decline in premarket trading. The company’s stock rose by approximately 35% last year but has decreased by 13% this year amid investor concerns regarding its significant investments in AI technologies.
Featured image credit: Alex Dudar/Unsplash
