Google has announced a definitive agreement to acquire cybersecurity firm Wiz for a staggering $32 billion in an all-cash transaction, The Associated Press reports.
This marks Google’s largest acquisition to date, signaling its aggressive expansion into the burgeoning cloud computing market fueled by the artificial intelligence boom. The move comes at a crucial time for Google, as the tech giant faces mounting regulatory scrutiny and a potential breakup of its vast internet empire.
The acquisition of Wiz would bolster Google Cloud, a rapidly growing division separate from Google’s core search and advertising business. Cloud revenue surged 64% last year to $43.2 billion, showcasing its increasing importance within Alphabet’s portfolio.
Wiz, a five-year-old startup founded by Israeli army veterans, provides cutting-edge security tools to protect data stored in data centers. The company is projected to generate $1 billion in revenue this year and is currently headquartered in New York.
Google CEO Sundar Pichai emphasized the benefits of the acquisition, stating that the addition of Wiz to Google Cloud would result in “even better security at a lower cost.” This statement is likely aimed at both potential customers and regulators who will scrutinize the deal’s impact on competition.
According to Wedbush analysts, the Wiz acquisition is a “shot across the bow” at rival tech giants Microsoft and Amazon, both heavily invested in cybersecurity and cloud computing. The move could significantly alter the competitive landscape in the cloud space, where Google has been striving to catch up.
The $32 billion price tag surpasses Google’s previous record acquisition of Motorola Mobility for $12.5 billion in 2012. The Wiz deal would also be the largest cybersecurity acquisition ever and rank among the top 20 most expensive software company takeovers in history.
However, investors reacted cautiously to the news, with Alphabet’s shares declining 2% to close at $160.67 on Tuesday.
Google’s past acquisitions, such as YouTube and DoubleClick, have proven highly successful. The company’s $5.4 billion acquisition of Mandiant in 2022 also contributed to the growth of Google Cloud.
Despite these successes, Google faces increasing antitrust scrutiny. The US Justice Department has an ongoing antitrust case against Google’s ad technology and is seeking a potential breakup of the company’s search engine monopoly.
The Wiz acquisition is expected to face intense regulatory scrutiny, particularly regarding its potential impact on smaller cybersecurity vendors and larger competitors. While the potential Trump administration is expected to be more business-friendly, officials have also expressed concerns about the growing power of Big Tech.
Wedbush analysts note the cybersecurity industry is “ripe for consolidation,” creating “massive growth opportunities” amidst the AI revolution.
The agreement to the sale suggests Google and Wiz are more confident the deal will gain U.S. approval under the potential Trump administration, according to Mergermarket analysts.
The acquisition remains subject to regulatory approval.
