Google is close to making its biggest acquisition ever

Google owner Alphabet is in advanced discussions to buy fast-growing cybersecurity startup Wiz for about $23 billion, a person familiar with the matter confirmed to CNN.

The acquisition of Wiz, which makes cybersecurity software for cloud computing, would represent a big bet by Google in cybersecurity, marking the tech giant’s biggest acquisition ever.

Discussions between Google and Wiz began after the startup raised US$1 billion from venture capital investors earlier this year, the source said.

The terms of a possible agreement have not been finalized and negotiations could still fail, according to the source.

News of the Google-Wiz negotiations was first reported by Wall Street Journal.

Neither Google nor Wiz responded to CNN’s requests for comment.

The deal would easily surpass Google’s purchase of Motorola for US$ 12.5 billion about a decade ago, the largest acquisition in the company’s history. Google offloaded Motorola just two years later for a huge loss.

Wiz’s $23 billion price tag is nearly double the startup’s $12 billion valuation in its most recent funding round.

In March 2022, Alphabet bought cybersecurity company Mandiant for $5.4 billion as part of its efforts to help companies better address cyber threats and bolster their cloud computing businesses.

Google Cloud is central to the company’s efforts to diversify revenue beyond its core search advertising business. While its cloud sales have grown, it has struggled to compete with similar services from Microsoft and Amazon.

Buying Wiz would be a “straight shot” for Microsoft and Amazon, showing that Google is making a “big bet in the cybersecurity space to complement its core cloud offering,” Dan Ives, managing director and senior research analyst of shares at Wedbush, he wrote in a note to clients on Monday.

Cloud security has become especially important in recent years as companies have spent heavily to move data to cloud platforms. Last week, AT&T revealed that Almost all of its wireless customers’ call and text message logs were exposed in a massive breach caused by an “illegal download” on a third-party cloud platform.

The Google-Wiz deal negotiations come despite intense antitrust scrutiny under the Biden administration of tech giants.

However, that antitrust scrutiny could be slowed somewhat if Trump once again takes control of the White House, Ives said, making the Federal Trade Commission “much weaker” and triggering an “accelerated M&A environment for Big Tech.”

If the acquisition is finalized and closed, it would mark a massive exit for Wiz and its founders – Assaf Rappaport, Ami Luttwak, Yinon Costica and Roy Reznik. The four executives met years ago when they were drafted into Unit 8200, the cyber intelligence division of the Israel Defense Forces.

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Since launching in March 2020 during the Covid-19 pandemic, New York-based Wiz has experienced explosive growth. Today, the company claims that 40% of the Fortune 100 companies are its customers.

Notable clients include BMW, Slack and Salesforce, and it works with major cloud companies including Amazon, Microsoft and Google.

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