Google to buy cybersecurity firm Wiz for $32B US in company’s biggest ever

Google’s parent company, Alphabet, has struck a deal to buy cybersecurity firm Wiz for $32 billion US in what would be the tech giant’s biggest-ever acquisition, a move which comes 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 centres 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. Most of Alphabet’s $350-billion US annual revenue still stems from its search and advertising operations, but with the advent of AI, the cloud division has become a rising star at Google.

Annual revenue in the division was $26.3 billion US in 2022, and soared 64 per cent to $43.2 billion US last year.

The bid Tuesday, which would go down as the biggest-ever cybersecurity acquisition across the sector, easily eclipses the current largest acquisition in Google’s 26-year history — a $12.5-billion US takeover of Motorola Mobility in 2012 that didn’t pay off the way that the Mountain View, Calif., company had hoped. 

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 US 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 centres from its current headquarters in New York.

“Wiz and Google Cloud are both fuelled 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 it was at prospective customers.

Google had been courting Wiz for some time before finally settling on a significantly higher price than the reported $23-billion US bid that was rejected last July. 

Investors reacted coolly to Tuesday’s news, as they usually do with high-price acquisitions, with Alphabet’s shares declining two per cent. 

Some of Google’s other acquisitions have turned into gold mines, most notably its $1.76-billion US purchase of online video pioneer YouTube in 2006 and its $3.1-billion US takeover of…