SAN FRANCISCO (AP) — Google has struck a deal to buy cybersecurity firm Wiz for $32 billion in what would be the tech giant’s biggest-ever acquisition at the same time it’s facing a potential breakup of its internet empire.
The proposed takeover announced Tuesday is part of Google’s aggressive expansion into cloud computing during an artificial intelligence boom. The frenzy is driving demand for data centers that provide the computing power for AI technology and intensifying the competition in that space among Google and two other tech powerhouses, Microsoft and Amazon.
If the all-cash transaction is approved by regulators, Wiz will join Google Cloud — an increasingly important part of its business separate from the search and advertising operations that account for most of the $350 billion annual revenue at Google’s parent company, Alphabet.
With the advent of AI, however, the cloud division has become a rising star at Google. Annual revenue in the division was $26.3 billion in 2022, and soared 64% to $43.2 billion last year.
Wiz, a five-year-old startup founded by four longtime friends who met in the Israeli army when they were still teenagers, is on track for an estimated $1 billion in revenue this year. After getting its start in Israel in 2020, Wiz now oversees an operation that makes security tools protecting the information stored in data centers from its current headquarters in New York.
“Wiz and Google Cloud are both fueled by the belief that cloud security needs to be easier, more accessible, more intelligent, and democratized, so more organizations can adopt and use cloud and AI securely,” Wiz CEO Assaf Rappaport wrote in a blog post.
In a Tuesday conference call, Google CEO Sundar Pichai predicted Cloud division’s addition of Wiz will result in even better security at a lower cost than can be provided now. That prediction may have been aimed as much at regulators likely to scrutinize how the deal will affect competition and pricing, as much as at prospective customers.
Google had been courting Wiz for some time before finally settling on a price that’s much richer than a reported $23 billion bid that was rejected last July. At that time, Wiz signaled it would instead pivot back to a previously-planned initial public offering. But recent volatility in the stock market has chilled the IPO market, and now Rappaport said Wiz expects to “innovate even faster” by becoming a part of Google.
Wedbush analysts called Google’s move to buy Wiz “a shot across the bow” at other tech giants, particularly Microsoft and Amazon, who have already made big bets on cyber security as the fight to dominate cloud computing intensifies. Google had fallen behind its competition in the cloud space, Wedbush said, but the acquisition of Wiz could alter the parameters.
