Google’s owner, Alphabet, has agreed to buy the cybersecurity group Wiz for $32bn (£24.7bn), the biggest acquisition it has ever made.
The search giant’s purchase of the Israeli startup comes as Google attempts to catch its competitors Microsoft and Amazon in the competitive cloud services market.
Wiz, which offers a service that scans the data on cloud storage providers such as Amazon Web Services and Microsoft Azure for security risks, turned down a $23bn takeover bid from Alphabet last summer.
The talks failed in part because Wiz and some of its investors were concerned about gaining clearance from regulators.
Alphabet has agreed to pay a $3.2bn fee if the deal fails to complete, as the takeover marks a test of the Trump administration’s appetite to follow former president Joe Biden’s lead in taking on Big Tech.
US justice department officials are trying to force Google to sell off its Chrome browser to dismantle its monopoly it has over the search market.
Wiz, which has offices in New York and Israel and opened its European headquarters in London last year, was founded in 2020 by alumni of the Israeli Intelligence Corps’ Unit 8200. It has the backing of investors including the venture capital firms Sequoia, Thrive and Advent International.
Following the acquisition, Wiz will retain its brand and operate independently of Google, mirroring the way Microsoft operates LinkedIn, according to sources familiar with the deal.
Wiz will also continue to work with, and be available across, all major cloud platforms including Amazon Web Services, Microsoft Azure and Oracle Cloud.
Sundar Pichai, chief executive of Google, said: “Together, Google Cloud and Wiz will turbocharge improved cloud security and the ability to use multiple clouds. Today, businesses and governments that run in the cloud are looking for even stronger security solutions, and greater choice in cloud computing providers.”
When Wiz rejected Alphabet’s $23bn offer, Assaf Rappaport, the startup’s chief executive, said he was “flattered” by the offer but wanted to focus on growth with an eye to floating on the stock market instead.
“This is an exciting moment for our company, but an even more important one for customers and partners,” Rappaport said on Tuesday.
Dan Ives, an analyst at the US broker and investment manager Wedbush, said: “Wiz has become a household name for chief information officers as the Israeli cybersecurity player has a strong cloud cybersecurity platform and customer base that is going after a $1trn market opportunity.
after newsletter promotion
“For Google this [will] be a shot across the bow at other big tech stalwarts, especially Microsoft and Amazon, making a major bet on the cybersecurity space to complement its cloud offering.”
Wiz has said its revenues are $750m annually. Wedbush estimated that Google could drive it to a $1bn-plus business over the coming years “given the company’s massive installed base and go-to-market strategy globally”.
Alphabet’s previous biggest deal was its $12.5bn acquisition of Motorola Mobility in 2012, which it sold two years later for $2.9bn.
Three years ago Alphabet paid $5.4bn to acquire the cybersecurity company Mandiant, to bolster its Google Cloud product. Other deals include paying $1.65bn for YouTube in 2006, and buying the UK AI startup DeepMind for about £400m in 2014.
Alphabet is keen to diversify its business away from its dependence on search-related advertising. The company hopes that Wiz will help it to increase its global market share of the cloud market from 12%, a distant third behind Microsoft Azure at 21% and Amazon Web Services, which has almost a third.
Ives said: “While this deal is expected to see further regulatory scrutiny across the board, we view this as a strategic move by Google to further bolster its cloud security offering and value proposition to enterprises as the company doubles down on its cloud and AI initiatives moving forward.”
