Google has completed a binding deal to purchase Wiz, a prominent cloud security venture, for $32 billion in cash. The deal is the biggest ever by Google and is designed to strengthen its cloud security offerings as threats continue to increase in the cybersecurity environment. Wiz will become part of Google’s cloud unit, further expanding its capabilities to deliver more efficient and scalable security solutions on key cloud platforms.
The deal follows Google’s previous attempt to buy Wiz for $23 billion, which was turned down by the startup firm last year. Wiz had been considering an initial public offering (IPO) but opted for the acquisition after Google increased its offer and raised the breakup fee significantly to over $3.2 billion. The talks have gained momentum after the latest political events, with sources referring to the fact that the shift in the political climate under Trump contributed heavily towards finalizing the deal.
Google’s foray into cloud security is strategic as the company aims to bridge the gap with its competitors, Microsoft and Amazon, who have gained heavily in AI cloud services. Microsoft and Amazon earned cloud revenues of $105 billion and $107 billion, respectively, during the fiscal year 2024, whereas the cloud revenues of Google barely reached $43 billion. The buyout is perceived as a gamble to support the cloud business of Google, which is less robust than that of its top contenders.
Wiz is an Israeli-born firm that excels at its cloud security platform that supports all the major clouds and code frameworks. It has been expanding rapidly and collaborating with major corporations like Microsoft and Amazon to offer cloud-centric cybersecurity services. Wiz’s platform stops cybersecurity incidents and caters to all organization sizes, from startups to governments.
The acquisition is part of Google’s pushy forays into cloud computing during an artificial intelligence boom. The demand for data centers providing computing power for AI technology is driving competition between Amazon, Microsoft, and Google. Google Cloud chief executive Thomas Kurian was instrumental in leading the acquisition since he wants to augment Google’s cloud security capabilities.
Google Chief Executive Sundar Pichai underscored the importance of security in the emerging AI paradigm, noting that AI brings new threats but also new opportunities to enhance security capabilities. Google Cloud’s Wiz acquisition is expected to provide a single platform for security that protects code, CI/CD pipelines, and cloud infrastructure on all major clouds.
The deal is to get the requisite approvals from the regulators prior to its closure, which is expected by 2026. Despite the worst-case scenario of regulatory scrutiny, Alphabet and Wiz are hopeful that the current administration will view the acquisition in a favorable light. However, the success of the deal will also depend on surmounting gigantic challenges of reconciling the costly acquisition with the necessity of dispelling regulatory concerns over such a high-profile deal.
Wiz will be an autonomous platform, on more than one cloud provider in addition to the Google Cloud Platform. The company can plan for its headcount increase to manage its growth and has room to pursue other acquisitions. Wiz’s current approximate annual recurring revenue is $700 million, and its autonomy among the larger company is likened to the Microsoft-LINKEDIN acquisition.
