Google, renowned for its search engine and diverse internet services, is poised for its largest acquisition to date, aimed at enhancing its business customer offerings. The tech giant is in advanced negotiations to acquire Wiz, a cybersecurity start-up based in New York, according to The Wall Street Journal.
Potential $23 Billion Acquisition
The deal, estimated at approximately $23 billion, would significantly surpass Google's previous highest acquisition of Motorola Mobility for $12.5 billion in 2012. Although there is optimism about the deal proceeding, sources caution that negotiations could still fall through.
Regulatory Challenges and Antitrust Concerns
Google is moving forward with the deal despite potential regulatory hurdles. The company is aware that regulatory bodies might attempt to block the acquisition but appears ready to contest any opposition. This acquisition is part of Google's strategy to strengthen its cloud-computing division, which currently lags behind Amazon Web Services and Microsoft Azure.
Google is already facing two antitrust lawsuits filed by the Justice Department—one targeting its dominant search engine and the other aiming to dismantle its digital advertising technology business. A verdict in the search case is expected soon.
Under President Biden, US regulators have taken a stringent stance against major tech acquisitions and corporate consolidation. Notable blocks include Penguin Random House's $2.18 billion acquisition of Simon & Schuster and JetBlue's $3.8 billion acquisition of Spirit Airlines. Amazon also abandoned its $1.7 billion acquisition of iRobot following resistance from European and US regulators. Meanwhile, the Federal Trade Commission’s attempt to block Microsoft's acquisition of Activision failed.
Strategic Move for Google Cloud
Google has long sought to diversify its revenue streams beyond online advertising, with platforms like Google Search and YouTube still accounting for the majority of its income. Acquiring Wiz would not immediately transform Google's financial landscape but would strengthen Google Cloud's position. Wiz's data security services for AWS, Azure, and other cloud platforms would provide a crucial link for Google Cloud.
This move represents a bold departure for Google, traditionally cautious about large-scale acquisitions. The company sold Motorola to Lenovo at a loss shortly after its purchase and faced intense regulatory scrutiny for its $2.1 billion acquisition of FitBit in 2021.
Recent Enhancements in Google’s Cloud Computing Capabilities
Google has been bolstering its cloud computing capabilities through strategic acquisitions. In 2022, it acquired cybersecurity firm Mandiant for $5.4 billion and another cybersecurity company, Siemplify, within the same year.
Leadership and Vision
Thomas Kurian, CEO of Google Cloud, is reportedly leading the push to acquire Wiz. His vision is to position cybersecurity as a defining strength of Google Cloud, and Wiz is seen as a critical asset in achieving this goal. Wiz assists corporate clients like BMW, Slack, and Morgan Stanley in mitigating security risks associated with cloud computing services.
About Wiz
Founded in Israel in 2020 and now headquartered in New York, Wiz secured $1 billion in funding in May, valuing the company at $12 billion. The start-up has experienced rapid growth, with annual recurring revenue soaring to $350 million, up from $100 million just two years prior.
