The company that owns Google and Google Cloud may be heading toward a major acquisition of a cloud cybersecurity company, according to industry sources.
Acquisition Rumours
Alphabet Inc., Google’s parent company, is in talks to buy a major cloud security startup worth as much as $23 billion, according to reports from Bloomberg and the Wall Street Journal.
Talks Still Ongoing
Inside sources familiar with the deal have shared that talks are still ongoing with no clear indication of which way it will go. It could conclude with no acquisition.
Biggest Acquisition in Alphabet History
If the deal goes ahead it will be the biggest acquisition deal in the company’s history since it was created through a restructuring of Google back in 2015.
Wiz Kid
The subject of the acquisition talks is Wiz, an Israeli-founded and now New York-cased startup that was founded in 2020, with the aim of offering cybersecurity to major companies that utilize cloud storage.
Cloud Computing Security
It offers a broad approach to cloud security, analyzing data from cloud computing services like Google Cloud, Amazon Web Services, and others to identify potential security risks and threats.
A Rapid Ascendence
The company’s ascendence gained international attention almost immediately – within a year it was evaluated at $1.7 billion, and it has raised a total of $1.9 billion in funding from venture capital funds and private investors.
Record-Breaking Startup
Wiz has even claimed that it is the fastest company in history to scale up from $1 million to $100 million in annual recurring revenue, which reportedly occurred between February 2021 and July 2022.
No Responses Yet
So far representatives for Wiz have declined to comment on the alleged talks, and Alphabet representatives have not yet responded to requests for comment.
Google Cloud Expansion
An acquisition of Wiz by Alphabet is no major surprise, given that the tech company has been making moves to grow and strengthen its Google Cloud services.
28% Growth
Google Cloud is currently the world’s third-largest cloud computing company and is one of the fastest-growing companies under Alphabet’s umbrella. In the first quarter of 2024, it grew by 28%, generating $9.57 billion.
$1 Billion Investment
The announcement also comes just two months after Wiz announced its Series E round of funding, which had raised $1 billion in funding based on a $12 billion valuation. Bringing Wiz under Alphabet would be a timely move from a growth perspective.
A Major Player
Wiz is also currently partnered with 40% of all Fortune 500 companies, including Morgan Stanley and DocuSign. It has also announced plans to expand its global workforce by 400 employees by the end of the year.
Focus on Google Cloud
Google CEO Sundar Pichai previously announced in an analyst call that Google Cloud would continue to grow exponentially. It is favored by artificial intelligence companies and startups around the world, and the AI technological boom still has no end in sight.
AI Focus
“Today, more than 60 percent of funded GenAI startups and nearly 90 percent of GenAI unicorns are Google Cloud customers,” Pichai said.
Match Made in Heaven?
Bringing a high-profile, well-established cloud cybersecurity company like Wiz under Alphabet’s wing would likely add even more authority and reliability to Google Cloud.
Playing Catch Up
It could also help Google Cloud to catch up to Microsoft and Amazon which are both dominating the increasingly competitive cloud computing market.
Paid in Cash
Reuters has reported that the finalization of the deal can be expected soon, and if it goes through most of the payment will likely be made in cash.
Under Intense Federal Scrutiny
While an acquisition of Wiz might seem like a natural move for Alphabet, it is somewhat unusual as the company is currently facing heightened scrutiny from antitrust regulators and the Biden administration.
Two Lawsuits Ongoing
Google is facing two antitrust lawsuits filed against it by the US Department of Justice. One has accused the company of asserting its market dominance over search engines by sidelining search engine competitors.
Market Monopoly
The other has accused Google of “monopolizing multiple digital advertising technology products” in violation of the Sherman Act, according to the DOJ press release. Regardless, the company is still striving to extend its growth despite a fraught political climate and major legal challenges.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
