Google agreed to buy Wiz, a fast-growing cybersecurity startup, to buy the company’s biggest driver for $32 billion to strengthen its cloud computing business and surpass search engines and consumer internet services to make it a household name.
The all-cash deal announced on Tuesday will be Google's largest, easily surpassing its 2012 Motorola mobility $12.5 billion.
With this deal, Google will acquire a five-year company that most consumers are unfamiliar with, but more and more businesses rely on to protect their cloud applications. The Silicon Valley giant worked for several months last year and concluded a deal for Wiz, which was recently worth $12 billion. In July, Wiz rejected Google's $23 billion acquisition offer, saying it wanted to make an initial public offering, which has never happened.
The company's expected splash purchases to close in 2026 will inject new momentum into Google Cloud, the unit that sells computing services to other businesses. This is also the most radical effort of the technology giant to keep up with rival Microsoft's cybersecurity.
Google CEO Sundar Pichai said on Tuesday’s conference call about the deal that the company bought Wiz because it “is an innovative, leading cloud security platform.”
“The pace and impact of violations are accelerating. AI brings new risks, but also new opportunities,” he added.
But first, Google's parent company, Alphabet, must clear regulatory barriers.
The deal will test the company's ability to make major acquisitions in a protracted antitrust battle with the U.S. government. The Justice Department has sued Google in two separate monopoly cases, one against its ubiquitous search engine and the other against its digital advertising technology business. A federal judge ruled last year that the company illegally maintained its monopoly in online searches and would decide on remedies to resume competition by August.
Under President Trump, regulators continue to oppose corporate mergers. In January, the Justice Department filed a lawsuit to prevent HP's enterprises from acquiring rival Juniper Networks, arguing the deal would eliminate competition and raise prices.
For Google, which has been away from massive acquisitions in recent years, Wiz has proven to be a worthwhile regulatory risk. Mr Pichai emphasized the startup's ability to drive growth, saying the Fortune 100 uses Wiz's technology.
Evelyn Mitchell-Wolf, an analyst at Emarketer, a company that compiles business data, said in an email whether Google will get the transaction's regulatory approval.
“Given its price tag, and the fact that Google has been found guilty in the search market, the acquisition will attract too much scrutiny to proceed completely unhindered,” she wrote.
The purchase is in line with the letter’s many years-long strategy of trying to diversify from search engines, YouTube video services and other online advertising businesses that bring in three-quarters of revenue. Alphabet has created venture companies like self-driving car companies Waymo and Cherily, which focuses on healthcare, but they haven't paid off in full.
The company has pumped resources into Google Cloud. Like its competitors Amazon Web Services and Microsoft Azure, the business provides services that help companies store and analyze data and run applications.
WIZ's acquisition is consistent with plans to make Google Cloud a bigger player in cybersecurity. Under the leadership of the division’s CEO Thomas Kurian, Google Cloud purchased two cybersecurity companies in 2022, dominating for $5.4 billion and earning Siemplify for $500 million. The strategy could help Google catch up with Microsoft, which said it generates more than $20 billion in annual revenue from security, making it the world's largest provider of cybersecurity software.
Two people familiar with the negotiations said Google and Witz resumed discussions about the deal in August. Two people near the company said it had already started another round of fundraising when Wiz agreed to Google's offer.
Google has proposed that the deal will not undermine competition in the cloud market. Mr. Curian said on the call that if Wiz joins his department, it will continue to work with other cloud providers including Microsoft, Amazon and Oracle. He added that, together with Wiz, Google will be able to make customers more aware of their systems and prevent new threats from artificial intelligence.
If completed, the deal could help revitalize Google Cloud's revenue expansion. As the business grows, its pace usually slows down, although revenue in the fourth quarter increased 30% from the same period last year to $12 billion.
Witz grew rapidly. Last year, it said it had $350 million in recurring revenue, up from $100 million two years ago. The company, based in New York, said it plans to earn $1 billion in regular revenue this year.
WIZ CEO Assaf Rappaport said on the phone that the acquisition will “accelerate our innovation faster than we can as an independent company, allowing us to protect more organizations.”
Wiz's investors include Andreessen Horowitz, Index Ventures, Thrive Capital, Greenoaks and Advent International.
Lauren Hirsch Reports from New York.
