Google’s Plan To Buy Wiz: 5 Microsoft, HubSpot And IPO Things To Know

‘For Google, this would be a shot across the bow at Microsoft and Amazon, making a major bet on the cybersecurity space to complement its flagship GCP offering in the cloud,’ says Wedbush Securities analyst Dan Ives. Here are five key things to know about Google’s potential $23 billion bid for red-hot security startup Wiz.

Google’s potential game-changing cybersecurity acquisition of Wiz could shake up both the cloud security and AI landscape with a historic $23 billion purchase price.

The Mountain View, Calif.-based tech giant has a war chest of over $24 billion in cash and cash equivalents as of March 31, 2024, making the blockbuster acquisition a real possibility.

“For Google, this would be a shot across the bow at Microsoft and Amazon, making a major bet on the cybersecurity space to complement its flagship GCP [Google Cloud Platform] offering in the cloud,” said Wedbush Securities analyst Dan Ives in an investor note.

Importantly, the news of Google potentially acquiring the New York-based startup comes after the tech giant just ended its plans to acquire HubSpot. At the same time, antitrust ligation by government authorities around blocking acquisitions that would create monopolies is increasing around the globe.

Who Is Wiz?

Founded in 2020, Wiz is a New York-based cybersecurity startup company that was originally launched in Israel by co-founder and CEO Assaf Rappaport.

The startup was formed by members of the Israeli military’s Unit 8200 intelligence unit.

Wiz, which made CRN’s recent 10 Hottest AI Startups of 2024 list, provides technology that scans every layer of the cloud to provide visibility while also identifying and eliminating the risks in the cloud.

In addition, Wiz recently acquired security startup Gem Security to boost its cloud detection and response capabilities.

There is little doubt that Wiz would particularly benefit Google’s cloud business, Google Cloud, which is the driving force behind the company’s cybersecurity, cloud and AI strategy. Google also hasn’t been shy about making a deal for a security company, as seen with its 2022 purchase of cybersecurity company Mandiant for $5.4 billion.

Google and Wiz did not respond for comment on the matter by press time.

CRN breaks down the five biggest things partners, investors and customers need to know about Google’s potential purchase of Wiz, including co-founder and CEO Assaf Rappaport telling CRN earlier this year that he wanted to take Wiz public.

Google Has $24 Billion In Cash, Drops Out Of HubSpot Deal

As of March 31, 2024, Google has more than $24 billion in cash and cash equivalents.

Google has free cash flow of $16.8 billion, which it defines as net cash provided by operating activities less capital expenditures.

In terms of total cash, cash equivalents and marketable securities, Google has over $108 billion.

This all means that the tech giant has the cash on hand to fund a massive acquisition in 2024.

Earlier this year, Google was reportedly looking to spend billions on acquiring HubSpot in a move to significantly boost its CRM technology and customer base.

However, Google just last week reportedly walked away from the deal.

The Takeaway: Google has the cash to spend on buying Wiz. HubSpot would have cost billions as well to buy. The movement by Google over the past couple of months shows that it may be ready to make a massive acquisition.

A $23 Billion Deal Would Be 70 Times Greater Than Wiz’s Revenue

Wiz generated $350 million in annual recurring revenue in 2023.

The reported $23 billion price tag for Wiz means Google woulbe be ready to spend nearly 70X more than what Wiz makes in total sales.

It is key to note that Wiz is heavily backed by Silicon Valley venture capitalists, including Salesforce Ventures, Capital Partners, Lightspeed, Cyberstarts, Sequoia, Insight Partners, Index Ventures and Blackstone.

Wiz is one of the fastest-growing software startups globally, providing cloud-based cybersecurity offerings with real-time threat detection and responses powered by AI.

The company has about 900 employees across the globe, mostly in the U.S., Europe, Asia and Israel. Wiz recently said it wants to hire an additional 400 workers globally in 2024.

The Takeaway: Wiz is one of the hottest startups in the world right now with increasing sales and investor interest. It seems Google may be ready to pay a premium for the startup as Google Cloud doubles down on AI and cloud security in 2024.

Wiz Raised $1 Billion In 2024, CEO Considering Going Public

In May, Wiz announced $1 billion in new funding led by venture capital, pushing the four-year-old startup’s valuation to $12 billion.

Wiz has now raised a total of $1.9 billion since launching in 2020.

In his interview with CRN this year, Wiz’s Rappaport (pictured) said he wants to take the company public.

“We want to be a public company. So that’s our overall goal,” Rappaport told CRN in May. “I would say when we’ve reached probably $1 billion in ARR, that would be when we should be thinking more seriously about IPO.”

Wiz has seen surging growth throughout its four-year history—initially thanks to its cloud security posture management (CSPM) offering, which rapidly delivers improved cloud visibility and security. Wiz has since expanded its technology to become a broad Cloud Native Application Protection Platform (CNAPP) provider spanning security for cloud, code, data and AI.

The Takeaway: Wiz CEO Rappaport was already potentially preparting his startup to take the next big step, an IPO, in 2024. This shows Wiz’s leadership may be ready to make a big play this year, which could now mean a merger with Google.

Wiz Acquisition Would Help Google Cloud’s Security Battle Against Microsoft And Amazon

It’s no secret that the largest cloud players in the world—Google, Microsoft and Amazon—are all battling for cybersecurity market share as cloud security is top of mind for customers of all shapes and sizes.

Wiz currently works with Microsoft and AWS around offering integrated products while Wiz products are also available in online cloud marketplaces such as the AWS Marketplace.

“For Google this would be a shot across the bow at Microsoft and Amazon, making a major bet on the cybersecurity space to complement its flagship GCP offering in the cloud,” said Wedbush’s analyst Ives. “This would give Google an edge on a number of cloud deployments and further monetize the cybersecurity cloud space with still less than 50 percent of the workloads not on the cloud globally.”

Ives highlighted Google’s traction over the past year under Google Cloud CEO Thomas Kurian’s leadership “around cloud success along with its core AI strategy.”

Wiz said it works with 40 percent of the Fortune 100 companies.

Amazon Web Services is currently the No. 1 market-share leader in cloud computing, owning 31 percent share of the global cloud services market as of first-quarter 2024. Microsoft ranks No. 2 at 25 percent share, then Google Cloud at 11 percent share.

The Takeaway: Wiz’s technology and customer accounts undoubtedly could help Google Cloud compete better—and potentially win more market share—against its main cloud and AI rivals AWS and Microsoft Azure.

Time Line Of The Deal; Regulatory Hurdles

A Google-Wiz deal might be reached soon, according to multiple reports.

The deal would be mostly funded in cash, according to several news outlets, which Google has in spades.

It is key to note that over the past few years antitrust actions by government authorities in the U.S. and Europe have increased against tech giants Google, AWS and Microsoft. Global regulators have indicated growing aversion to large technology companies getting bigger and forming monopolies through acquisitions.

However, Bank of America analyst Justin Post said Google’s potential acquisition of Wiz might be a deal that is easier to swallow for regulators. Post said in a note that with less than 20 percent of global cloud market share, Google has a better chance in the courts than a consumer-focused deal.

The Takeaway: Google and Wiz have the potential to reach a deal very soon. Even as global regulators take deeper reviews on such acquisitions, Google’s readiness to be put under the microscope shows just how important it thinks Wiz is for Google Cloud and AI’s future.