In a surprising turn of events, cybersecurity startup Wiz decided to walk away from a $23 billion acquisition offer from Google, opting instead to pursue an initial public offering (IPO). The deal would have been Google’s largest acquisition to date.
Who is Wiz?
Wiz is an organization that offers cloud-cybersecurity solutions to enterprise-level organizations. Wiz has experienced remarkable growth, hitting $100 million ARR within 18 months and reaching $350 million last year. This rapid growth has positioned Wiz as a formidable player in cybersecurity.
The Wiz and Google Deal
The collapse of the Google-Wiz deal highlights the complexities and challenges of large-scale acquisitions in the tech industry. For Google, the failed acquisition represents a missed opportunity to strengthen its cloud security portfolio. For Wiz, the decision to pursue an IPO instead of being acquired underscores the company’s confidence in its growth potential and market position.
Factors Behind the Deal Collapse
Google’s acquisition of Wiz represented a significant push into the cybersecurity space. The proposed $23 billion deal was viewed as a strategic move for Google to enhance its cloud security offerings and better compete with Microsoft and Amazon.
Although not confirmed by either party, sources close to both organizations suggest that concerns about antitrust issues and investor interest played a significant role in the deal’s collapse. Regulatory implications could hinder the acquisition, as regulators may take considerable time to approve the deal.
Google’s String of Failed Acquisition
Google has made more than 200 acquisitions, some of which have significantly shaped its business landscape. However, not all acquisitions have been equally successful. The acquisition of Android in 2005 for an estimated $50 million was a masterstroke with Android OS powering billions of devices to date.
However, Google’s mastery of M&A fizzled with acquisitions that did not meet market expectations like the Motorola Mobility acquisition of $12.5 billion, Google ended up selling to Motorola to Lenovo in 2014 at $.291 billion. Google has also discontinued products after the acquisitions such as Google’s acquisition of Orkut which led to the creation of Google+ which was eventually deactivated in April 2019.
Additionally, some M&A deals have collapsed mid-way. Apart from the failed acquisition of Wiz, Google also attempted to acquire CRM giant HubSpot. This acquisition would have allowed Google to compete directly with Microsoft’s Dynamics 365.
These series of acquisitions highlight Google’s drive to compete with both Microsoft and Amazon in the enterprise-level cloud products market.
Implications for Tech
The failed deal could mean that Microsoft and Amazon’s dominance in cloud security remains unscathed.
The upcoming quarter promises to be particularly interesting for big tech companies, as Google’s failed acquisition of Wiz and the CrowdStrike-Microsoft debacle highlight how global security is largely controlled by a few major organizations.
These developments underscore the competitive nature of the cybersecurity market and the ongoing efforts by tech giants to fortify their positions. Industry analysts will be closely watching how these companies respond to the challenges and opportunities that arise from these significant events, potentially reshaping the landscape of global cybersecurity.
