The biggest deal in the history of Alphabet?
Alphabet is reportedly in advanced talks to buy cybersecurity startup Wiz Inc. According to a source familiar with the situation, the value of the acquisition could reach as high as $23 billion, which would make it Alphabet's largest purchase in history. However, no final agreement has yet been reached and negotiations could collapse at any time.
Acquisition history and regulatory hurdles
Alphabet already owns Mandiant, which it bought two years ago for $5.4 billion. That was Alphabet's second-largest acquisition to date, surpassed only by its purchase of Motorola Mobility Holdings LLC in 2012. A potential Wiz purchase would therefore be unusual in size and would likely attract significant attention from antitrust regulators.
Google $GOOGL+0.3% faces several antitrust challenges, including a lawsuit by the U.S. Department of Justice accusing it of abusing its dominant position in online search. Another lawsuit concerns its digital advertising tools.
Negotiations to acquire Wiz come at a time when Alphabet has dropped its effort to buy HubSpot Inc. as Bloomberg News reported last week.
A company profile of Wiz Inc.
Founded in 2020 and based in New York, Wiz specializes in scanning data stored in cloud storage services such as Amazon Web Services and Microsoft Azure to identify security risks. The company was valued at $12 billion during a funding round in May, with investors including Andreessen Horowitz, Lightspeed Venture Partners and Thrive Capital.
The acquisition of Wiz could help Google catch up to Microsoft and Amazon in the increasingly competitive cloud services market.
Alphabet and cloud services
Alphabet Inc.
GOOGLAlphabet's $GOOG+0.3% has been investing heavily in its cloud customer business recently, including offering more generative artificial intelligence tools for clients. Although Google still lags behind Microsoft and Amazon in the cloud computing market, the company reported that its cloud division was profitable in recent quarters, after years of losses.
Growing opportunities are emerging in the market as more startups move their applications and data to the cloud, particularly for generative artificial intelligence purposes. AI tools are trained on huge data and often require significant computing power to generate content such as images, marketing campaigns or software.
Competing with Microsoft
The Wiz acquisition could also increase Google's competition with Microsoft, the world's largest seller of cybersecurity products. Microsoft has faced a number of egregious hacking attacks in recent years that have exposed vulnerabilities in its corporate and government customers. Earlier this year, a U.S. government report criticized Microsoft for failing to stop hackers linked to the Chinese government from ransacking the email inboxes of U.S. officials.
Google is trying to take advantage of Microsoft's public failures in cybersecurity to offer its products to corporate and government customers. In May, Google released a document highlighting its rival's security flaws and considered running similar campaigns on social media and in advertising.
Google also offered government agencies one free year if they migrated 500 or more users to Google Workspace Enterprise Plus for three years, and promised a "significant discount" on the rest of the contract.
Source.
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