Google’s newest acquisition is its costliest but — and maybe its riskiest, too. On Tuesday, the search large introduced that it acquired the cloud safety startup Wiz for $32 billion. It’s a serious wager that Wiz might help beef up Google’s cloud enterprise, which makes far much less cash than the choices constructed by its largest rivals. But to try this, Google faces actual challenges integrating this costly acquisition and dodging regulatory considerations round what’s sure to be a high-profile buy.
Both Microsoft and Amazon have profited handsomely from the AI cloud gold rush, with their cloud providers reporting revenues reaching $105.4 billion and $107.6 billion, respectively, throughout fiscal yr 2024. Google, alternatively, is a minor participant as compared; its cloud income surpassed simply $43 billion in 2024. With the AI growth displaying no indicators of stopping, Google might have discovered a solution to shrink the hole with its fellow tech titans, even when it has to spend billions of {dollars} to get there.
“Security is a basic precedence for CEOs and authorities leaders around the globe, however the panorama is altering,” Google CEO Sundar Pichai mentioned throughout an buyers name. “The tempo and affect of breaches are accelerating. AI brings new dangers, but in addition new alternatives… Together, we consider this and Google Cloud can speed up the power of organizations to enhance their safety.” The deal will carry Wiz below the Google Cloud umbrella.
Though Google was in talks to buy Wiz final yr for $23 billion, Wiz backed out attributable to considerations about pushback from federal regulators and plans to file for an preliminary public providing. With the extra merger-friendly Trump administration in management, the businesses could possibly forge a path past regulatory hurdles.
Founded in 2020, Wiz has quickly turn out to be one of many fastest-growing software program firms on this planet. Its management crew has a historical past of success in cloud startups: Wiz CEO Assaf Rappaport and a number of other members of his government crew had been additionally behind Adallom — the cloud safety startup that Microsoft purchased for $320 million in 2015 and later rebranded as Microsoft Defender for Cloud Apps.
Google’s acquisition of Wiz is a “shot throughout the bow at Microsoft and Amazon”
Coupled with what Forbes calls a “hyper-aggressive” method to enterprise and maintenance-free cloud safety software program, Wiz is making a killing within the ever-growing AI trade. It affords an answer referred to as agentless safety, which suggests firms don’t should spend hours deploying particular person safety packages — or brokers — on each machine they need to safe. It connects to a cloud setting remotely, permitting consultants to supervise their setup utilizing a digital twin, or a duplicate of a cloud setup that they will use to simulate the affect of potential threats.
Other firms, like Palo Alto Networks and CrowdStrike, provide comparable safety instruments. But Wiz’s execution is completely different. “Anybody can do agentless,” Neil MacDonald, a VP and distinguished analyst at Gartner, informed The Verge final yr. “It’s the way you sew collectively and construct this digital twin mannequin and determine, prioritize and assist clients, remediate threat… That is what they’re [Wiz] actually, actually good at.”
Wiz additionally affords a user-friendly UI that MacDonald says is considered one of “the perfect” in its class. One instrument presents an online chart that reveals all of the connections in a cloud setting and the way a breach might affect it, whereas one other constantly scans a cloud setup to search out and determine dangers. These sorts of options will solely turn out to be extra necessary as main firms — and their customers — entrust their information to the cloud, whether or not it’s for storage or to course of requests with AI.
As a deluge of AI startups proceed purchasing round for a cloud supplier, they could take Google Cloud’s integration with Wiz under consideration. The firm payments itself as serving “clients of each measurement of enterprise — from startups to Fortune 100s.” Wiz’s advertising has paid off, with Rappaport scaling the startup from $1 million in annual income to $100 million in simply 18 months in 2022. Wiz has since hit $350 million in annual income, and almost half of all the firms within the high 100 of Fortune’s 500 listing use the software program. In May 2024, the startup raised $1 billion, placing the corporate’s valuation at round $12 billion.
For Google, that far-reaching viewers is a large benefit. The search large may use this acquisition as a chance to transform a few of Wiz’s clients to Google Cloud, in accordance with a 2024 report from The Information. Currently, OpenAI makes use of Microsoft Azure to run its AI providers, whereas Anthropic — the AI firm behind Claude — runs on each AWS and Google Cloud. Another AI firm, Midjourney, chosen Google Cloud as its supplier. And with Microsoft’s cybersecurity practices going through elevated scrutiny, it’s good timing for Google to get in on the cloud safety recreation.
Customers don’t even have to decide on Google Cloud as their supplier for Google to profit. Since Wiz integrates instantly with the providers supplied by Google, Amazon, Microsoft, Oracle, and others, Google can set up itself as a safety supplier past its cloud providing. Aside from Wiz, Google’s rising safety portfolio contains Mandiant, VirusTotal, and Chronicle (now referred to as Google Security Operations). “Google desires to turn out to be a severe enterprise safety vendor,” MacDonald mentioned. “Wiz helps to strengthen its credibility as an enterprise safety participant.”
“For Google this might be a shot throughout the bow at Microsoft and Amazon, making a serious wager on the cyber safety house,” Wedbush analyst Dan Ives wrote in an buyers be aware when the deal was first rumored final yr. “This would give Google an edge on quite a few cloud deployments and additional monetize the cyber safety cloud house with nonetheless lower than 50% of the workloads not on the cloud globally.”
But the deal doesn’t come with out its dangers. Google’s guardian firm, Alphabet, agreed to a reverse termination charge of $3.2 billion, in accordance with a report from the Financial Times, which calls the quantity “among the many highest of all time.” It dwarfs the $1 billion Adobe paid to Figma after it deserted its $20 billion acquisition and the $94 million Amazon paid to iRobot.
Even with President Donald Trump in workplace, Google continues to be anticipated to attract scrutiny from federal regulators. Andrew Ferguson, Trump’s choose for the chair of the Federal Trade Commission, mentioned in a February memo that he would retain the merger pointers devised below the Lina Khan-led FTC in 2023. Still, Ferguson has indicated being “extra open to utilizing settlements to resolve considerations about proposed mergers, quite than suing to dam doubtlessly problematic offers in each occasion,” as reported by The Wall Street Journal.
Google can also be within the midst of an energetic antitrust case that would drive the corporate to promote Chrome, a advice federal Judge Amit Mehta reaffirmed earlier this month. A separate antitrust trial, which accuses Google of monopolizing the promoting know-how market, concluded late final yr. With its acquisition of Wiz, Google will inherit the patent infringement lawsuit the startup is going through from the cloud cybersecurity firm Orca. In the swimsuit, Orca accuses Wiz of “ongoing, and unauthorized use of Orca’s patented applied sciences.”
Aside from potential authorized points, Google has struggled to combine massive acquisitions up to now, such because the $12.5 billion buy of Motorola Mobility in 2012, which was largely seen as a failure. Later on, Google’s $3.2 billion Nest acquisition led to chaotic restructuring and the departure of the good dwelling model’s founder and former CEO.
Google’s $32 billion wager is that the chance right here is much greater than any of those considerations — Wiz might put Google’s providers on the map at a turning level for cloud computing and AI.
