Alphabet Inc. is reportedly engaged in discussions to buy cloud-security company Wiz Inc. for a whopping $33 billion. This move comes as a revival of talks that were stalled last summer after extensive negotiations, as disclosed by individuals familiar with the situation.
This acquisition, if finalized, would mark Alphabet’s largest purchase to date and strategically position its Google Cloud division to better compete with giants like Microsoft Corp. and Amazon.com Inc. The cloud-computing sector is fierce, and Google’s recent profitability in its cloud business highlights the importance of this deal, despite a slowdown in sales growth.
The negotiations had been halted previously, with Wiz opting against Alphabet’s $23 billion offer in July last year. The refusal was largely due to concerns about the lengthy regulatory approvals processes, especially with increased scrutiny in the tech sector by regulators in both the US and Europe.
Wiz’s CEO, Assaf Rappaport, had earlier expressed a preference for maintaining independence to grow Wiz against key competitors such as CrowdStrike and Palo Alto Networks. However, changing circumstances appear to have reopened discussions.
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Notably, Alphabet faces its regulatory challenges. Google is already under scrutiny for its dominance in the online search market, facing accusations from the Department of Justice. These regulatory hurdles may impact the progression of the acquisition talks with Wiz.
Alphabet’s current standing as the third-largest cloud service provider after Microsoft and Amazon may provide a counter-argument to concerns of market concentration, potentially easing regulatory pressures.
The New York-based Wiz, founded by Israelis, boasts a valuation of around $12 billion from its recent funding round, backed by investors like Sequoia Capital and Insight Partners. This context underscores the strategic value Wiz adds to Alphabet’s cloud business.
Earlier reports about these renewed talks were made by the Wall Street Journal, indicating a growing interest from Alphabet in securing a stronger foothold in cybersecurity.
As discussions between Alphabet and Wiz continue, the outcome could significantly impact the competitive landscape of the cloud-computing market. While regulatory factors play a crucial role, Alphabet’s potential acquisition of Wiz signals an aggressive expansion strategy aiming to enhance its cloud offerings amidst notable industry competition.
