Google Buying Wiz Cybersecurity Group for $32 Billion

Google's parent company, Alphabet, has signed an agreement to buy Wiz, a fast-growing cyber security startup, for $32 billion. This marks the biggest acquisition that Google has ever made.

Wiz will be part of Google's Cloud unit, providing better cloud security for Google Cloud Platform and strengthening the company's efforts to cope with cybersecurity threats.

Google's Official Statement:

Google announced the agreement to acquire Wiz:

Last year, Alphabet also attempted to acquire Wiz, but Wiz rejected Alphabet's $23 billion deal. It was valued at $12 billion in a private funding round last May, with more than $500 million in annual recurring revenue as of mid-2024. The talks failed partly because Wiz and some of its investors were concerned about gaining clearance from regulators.

Alphabet has agreed to pay a $3.2 billion fee if the deal fails to close, one of the highest termination fees in M&A (Mergers and Acquisitions) history.

The acquisition of Wiz will be Google's move to compete with major Cloud providers, including Amazon and Microsoft. Amazon's AWS currently has about one-third of the entire cloud market share, Microsoft Azure owns 21% of the market share, while Google lags behind at about 12% market share. Google hopes Wiz will help it expand its global share of the cloud market.

D.A. Davidson analyst Gil Luria said the higher price is based on another year with the increasing demand of cloud solutions after the AI hype in recent times.

"For Google to be able to compete with Microsoft Azure for enterprise customers, it needs to be able to offer a deeper suite of services, including security software," he said.

Google's CEO Statement:

Sundar Pichai, CEO of Google commented on the acquisition:

Before Wiz, Alphabet’s largest acquisition was the $12.5 billion purchase of Motorola Mobility in 2012, which it sold two years later for $2.9 billion. Three years ago, Alphabet paid $5.4 billion to acquire the cybersecurity company Mandiant, to boost its Google Cloud products. Other deals include paying $1.65 billion for YouTube in 2006, and buying the UK AI startup DeepMind for about £400m in 2014.

Following the acquisition, Wiz will retain its brand and operate independently of Google, Google has agreed to it. Wiz will also continue to work with, and be available across, all major cloud platforms including Amazon Web Services, Microsoft Azure and Oracle Cloud.

Exclusivity has been a principal subject in recent antitrust cases, including the U.S. Department of Justice's existing case over Google's search monopoly. The DOJ demanded Google to sell its Chrome browser in response to a judge’s ruling against its antitrust practices.

"Generally speaking, Google is not a leader in the cloud business, and Wiz will still be available on all other cloud services," said Elise Phillips, policy counsel at Public Knowledge, a public interest advocacy group. "Any type of exclusivity agreement between the two of them down the line would give me cause for concern."

Conclusion:

The high price and unusually large breakup fee suggest Alphabet is confident the deal will pass scrutiny with the White House, even as the Trump administration has intervened in major deals and promised heavy scrutiny of Big Tech. Observers see this acquisition as a key test of the current administration’s stance in the ongoing scenario.