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Alphabet to acquire cloud-security firm Wiz for $33 billion amid rising competition from Microsoft and Amazon

Alphabet to acquire cloud-security firm Wiz for $33 billion amid rising competition from Microsoft and Amazon

  • 18.03.2025 01:57
  • livemint.com
  • Keywords: Alphabet Inc., Wiz Inc.

Alphabet is in talks to acquire cloud-security firm Wiz for $33 billion, aiming to boost its competitive position against Microsoft and Amazon in the cloud market. The deal could face antitrust scrutiny, as Google has previously faced regulatory challenges.

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Estimated market influence

Alphabet Inc.

Alphabet Inc.

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Analyst rating: Buy

Alphabet is in talks to acquire Wiz for $33 billion, which could be their largest acquisition. This move aims to help Google compete with Microsoft and Amazon in the cloud-computing market.

Wiz Inc.

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Analyst rating: N/A

Wiz is set to be acquired by Alphabet for $33 billion, which would provide significant financial gain. This acquisition reverses their previous decision to remain independent and pursue an IPO.

Context

Analysis and Summary: Alphabet's Acquisition of Wiz

Key Deal Details

  • Acquisition Value: $33 billion, making it Alphabet’s largest acquisition to date.
  • Target Company: Wiz Inc., a cloud-security firm.
  • Previous Talks: Negotiations were called off last summer but have resumed.
  • Potential Announcement: Expected as soon as Tuesday.

Market Implications

1. Cloud Computing Competition

  • Google's Position: Alphabet’s Google is currently No. 3 in the cloud market, behind Microsoft and Amazon.
  • Strategic Move: The acquisition aims to help Google catch up with its rivals in the competitive cloud-computing sector.

2. Wiz’s Independent Ambitions

  • Previous Decision: Wiz rejected Alphabet’s $23 billion offer last July, opting for an IPO and independence.
  • Investors: Backed by Sequoia Capital, Index Ventures, Insight Partners, and Cyberstarts.
  • Valuation: Last valued at $12 billion in a funding round.

Competitive Dynamics

1. Regulatory Scrutiny

  • Antitrust Concerns: Alphabet’s acquisition may face scrutiny due to its existing antitrust issues, including:
    • A federal ruling that Google maintained an illegal monopoly in online search.
    • Ongoing cases over digital advertising tools.
  • Potential Argument: Google’s No. 3 position in the cloud market could be used to counter concerns about market concentration.

2. Wiz’s Growth Strategy

  • CEO Vision: Wiz CEO Assaf Rappaport sought to build an independent cybersecurity giant, competing with firms like CrowdStrike and Palo Alto Networks.
  • Regulatory Concerns: The deal could face delays due to concerns about regulatory approval processes in the U.S. and Europe.

Strategic Considerations

1. Alphabet’s Cloud Business

  • Recent Performance: Google’s cloud business has become profitable but faces slower sales growth.
  • Growth Strategy: The acquisition of Wiz could accelerate Alphabet’s push into enterprise security, a critical area for cloud providers.

2. Wiz’s Technology and Talent

  • Security Expertise: Wiz specializes in cloud security, offering advanced threat detection and response solutions.
  • Talent Pool: The acquisition could bolster Google Cloud’s cybersecurity capabilities and talent pool.

Long-Term Effects

1. Market Expansion

  • Potential Impact: The deal could strengthen Alphabet’s position in the cloud market and expand its reach in enterprise security.
  • IPO Plans: If the acquisition falls through, Wiz remains on track for an IPO, positioning itself as a major player in cybersecurity.

2. Regulatory Landscape

  • Future Challenges: Alphabet may face increased scrutiny from antitrust regulators, especially given its dominance in other sectors like search and advertising.

Conclusion

Alphabet’s proposed $33 billion acquisition of Wiz represents a significant move to bolster its cloud business and compete with Microsoft and Amazon. However, the deal faces challenges, including regulatory hurdles and concerns about market concentration. If successful, the acquisition could redefine Alphabet’s position in the cloud and cybersecurity markets, but it also carries risks tied to antitrust enforcement.