Google, one of the world’s most valuable companies, known for its search engine and diverse consumer internet services, is set for its largest-ever acquisition aimed at bolstering its offerings to business customers.
The potential deal is estimated to be worth approximately $23 billion, significantly surpassing Google’s previous high of $12.5 billion for Motorola Mobility in 2012. Despite the likelihood of the deal proceeding, there remains a possibility that negotiations could fall through, the sources cautioned.
Google is pressing forward with negotiations, aware that regulatory bodies may attempt to impede the deal. The company appears prepared to contest any opposition to strengthen its cloud-computing division, which currently trails behind industry leaders Amazon Web Services and Microsoft Azure.
Google is already embroiled in two separate antitrust lawsuits filed by the Justice Department. One targets its dominant search engine, while the other seeks to dismantle its digital advertising technology business. A verdict in the search case is anticipated soon.
Biden’s crackdown on big mergers
Regulators under US President Biden have adopted a stringent stance against acquisitions by major tech firms and corporate consolidation overall. Recent blocks include Penguin Random House’s $2.18 billion acquisition of Simon & Schuster and JetBlue’s $3.8 billion acquisition of Spirit Airlines. Additionally, Amazon abandoned its $1.7 billion acquisition of iRobot following resistance from European and US regulators. The Federal Trade Commission’s attempt to block Microsoft’s acquisition of video game company Activision also proved unsuccessful.
Google eyes revenue diversification
Google has long sought to diversify its revenue streams beyond online advertising, although platforms like Google Search and YouTube still account for the majority of its income. Acquiring Wiz would not immediately transform Google’s financial landscape but would establish a vital link between Google Cloud and companies that rely on Wiz for data security across AWS, Azure, and other cloud services.
This acquisition also marks a bold departure for Google, which has traditionally been cautious about large-scale purchases. The company previously sold Motorola to Lenovo at a loss shortly after its acquisition. More recently, in 2021, Google acquired FitBit for $2.1 billion, a deal that faced intense regulatory scrutiny before approval.
Google cloud strengthens cybersecurity portfolio
Google has been steadily enhancing its cloud computing capabilities through strategic acquisitions. In 2022, it acquired the cybersecurity firm Mandiant for $5.4 billion and also purchased another cybersecurity company, Siemplify, within the same year.
Thomas Kurian, chief executive of Google Cloud, is reportedly spearheading the push to acquire Wiz. His vision is to position cybersecurity as a defining strength of Google Cloud, and Wiz is seen as a critical asset in achieving this goal. Wiz assists corporate clients like BMW, Slack, and Morgan Stanley in mitigating security risks associated with cloud computing services.
Founded in Israel in 2020 and now headquartered in New York, Wiz announced in May that it had secured $1 billion in funding, valuing the company at $12 billion. The start-up has experienced rapid growth, with annual recurring revenue soaring to $350 million, up from $100 million just two years prior.
First Published: Jul 15 2024 | 11:09 AM IST