Alphabet to buy Wiz for US$32 billion in its biggest deal to boost cloud security
The logo for Google LLC is seen at the Google Store Chelsea in Manhattan, New York City, New York, US on Nov 17, 2021. (File photo: REUTERS/Andrew Kelly)
The blockbuster deal will help Google with fast-growing cybersecurity solutions that companies use to remove critical risks, and would test the Trump administration's appetite for big tech M&A after a few years of tight regulatory scrutiny.
Shares of Alphabet dipped more than 2 per cent. The stock has been down 13 per cent this year on worries over its hefty AI spending against the rise of China's lower-cost DeepSeek and a pullback in tech giants that led the market for the past two years.
Alphabet is paying a heavier price than its US$23 billion bid for Wiz last year, which the Israeli startup had rejected. It was valued at US$12 billion in a private funding round last May.
Wall Street is hoping for a shift in antitrust policies under President Donald Trump, whose pick to lead the Federal Trade Commission, Andrew Ferguson, is expected to dial back on big M&A regulation, a hallmark of his predecessor Lina Khan.
However, Trump has said he would continue heavy scrutiny on Big Tech, which began during his first term.
"There will likely be a microscope on the deal by investors, given Google's lacklustre historical track record with capital allocation plan, specifically around M&A," said Dave Wagner, portfolio manager at Aptus Capital Advisors.
After the deal closes, Wiz will join Google's cloud unit that generated more than US$40 billion in revenue in 2024 and has outpaced growth in the company's search business in recent years.
Wiz's products will continue to be available across other major cloud services. Alphabet expects the deal to close in 2026, subject to regulatory approvals.
DA Davidson analyst Gil Luria said the higher price is based on another year of exponential growth for Wiz.
"For Google to be able to compete with Microsoft Azure for enterprise customers, it needs to be able to offer a deeper suite of services, including security software," he said.
Wiz has agreed to a termination fee of more than US$3.2 billion, a source told Reuters, one of the highest fees in M&A history.
Interest in the cybersecurity industry has risen since last year's global CrowdStrike outage roiled operations across industries, prompting companies to spend more on safeguarding their online domains.
REGULATORY CONCERNS
Google has emphasised that Wiz would continue working with competing cloud platforms - potentially in a bid to head off regulatory concerns.
Interoperability has been a major theme in recent antitrust cases, including the US Department of Justice's existing case over Google's ad tech.
The FTC is pursuing an antitrust investigation into Microsoft's cloud computing business.
"Generally speaking, Google is not a leader in the cloud business, and Wiz will still be available on all other cloud services," said Elise Phillips, policy counsel at Public Knowledge, a public interest advocacy group.
"Any type of exclusivity agreement between the two of them down the line would give me cause for concern."
Google is already in the regulatory crosshairs, with the DOJ pushing for measures including a sale of its Chrome browser to address what a judge said was an illegal search monopoly.
"This (deal) will be a big test for pro-business advocates," said Aptus Capital's Wagner.
The company, which has kept aside US$75 billion in capital expenditures for 2025, said on Tuesday its capital allocation plans remain unchanged.
In 2015, Wiz's founders sold cloud security firm Adallom to Microsoft. The latest deal is another sign that Israel's cybersecurity industry punches well above its weight.
Several security companies based in Israel or founded by Israelis have been acquired by Silicon Valley giants, including Siemplify, which was bought by Alphabet in 2022, and Own, which Salesforce acquired in 2024.
