In what could be one of the largest cybersecurity space acquisitions to date, Google owner Alphabet is seeking to acquire Wiz, a startup that develops cybersecurity software for cloud computing. The deal has been valued at $23 billion, the largest for Alphabet, The Wall Street Journal first reported.
The potential price tag is far larger than the $12 billion valuation the startup had in its most recent round of funding, and Alphabet is looking to expand its cybersecurity reach. The company previously acquired the cybersecurity firm Mandiant in 2022 in a deal worth $5.4 billion. Mandiant was the shop that discovered the infamous SolarWinds hack back in 2020.
However, some experts have noted that Google has overpaid in the past. It acquired Motorola about a decade ago for $12.5 billion, before selling off the company just two years later at a loss.
SEcuring the Cloud
Google Cloud has remained a central component of the company’s efforts to diversify its revenue beyond search-based advertising, and while its cloud sales have grown, Amazon and Microsoft continue to be contenders in the space. Cloud security could help it chart a course in that sector, especially as so many companies have moved to the cloud – and continue to face cybersecurity threats.
New York City-based Wiz was founded by a former officer of the Israeli Defense Force’s famed 8200 military unit, which has seen a few former members launch successful tech businesses.
At issue is whether such an acquisition would be approved, given that the current administration has cracked down on mergers involving tech giants.
Why Buy a Company Instead of Hiring the Talent?
While Alphabet certainly has the deep pockets to go on a spending spree and simply buy up firms that would enhance its core business, the question remains why it wouldn’t just hire the talent instead.
“Only Alphabet can authoritatively speak to its motive for purchasing Wiz, but from the outside, we can easily speculate on likely values,” said Dr. Jim Purtilo, associate professor of computer science at the University of Maryland.
“The most obvious is that Wiz encompasses a powerful base of cybersecurity talent,” Purtilo told ClearanceJobs. “It isn’t like Alphabet doesn’t have cybersecurity expertise already, but since cyber remains a growth industry, this acquisition might be seen as a strategic move intended to leapfrog ahead. The combined resources will be more powerful.”
More importantly, Wiz also is likely to bring a specific experience base of interest – many who likely have signed non-compete clauses or non-disclosure agreements. Buying a firm like Wiz ensures there are no problems, and could keep the core team and more intact.
Then there is the fact that Alphabet wouldn’t be starting a competitor to Wiz, it could own the actual company. It isn’t technically priceless – as the sale could cost $23 billion, but in this case could be money well spent.
“Our community has much more about how to protect blue forces and attack threat actors, but because of its history and ties, the Wiz talent likely has substantial lore about how this all works in practice,” Purtilo added. “They’ve been deeply engaged in recent conflicts we read about daily in the news. That experience could be of immediate value to Alphabet.”
Ahead in the Clouds
This also circles back to Alphabet’s efforts to expand its cloud-based services. Wiz has quickly become an established player in the space and could allow Google to expand its stake there – offering a serious challenge to Amazon and Microsoft in the process.
“One of the most pressing competitions for Alphabet family companies is with cloud services. The federal government funds serious cloud infrastructure for various agencies and almost certainly will make more investments,” said Purtilo. “Google would surely like a big piece of that action, but there we are with Amazon and Microsoft in the way. The purchase of Wiz will lock up a lot of cloud talent that might have been at risk of moving to the competition.”
