Google will no longer buy cybersecurity startup Wiz, it has emerged. According to Reuters, which broke the story, Wiz has broken off talks that would have seen it acquired by the search giant for approximately $23bn – Google’s largest-ever, if it had proceeded. Now that negotiations have ended, said the startup’s chief executive Assaf Rappaport, Wix would concentrate on preparing Wiz for an initial public offering (IPO) and generate recurring annual revenues of up to $1bn.
“Saying no to such humbling offers is tough,” Rappaport told colleagues at Wiz in an internal memo. “But with our exceptional team, I feel confident in making that choice.”
Wiz deal would have boosted Google’s cloud security credentials
Headquartered in New York City and employing up to 950 people, Wiz claims to safeguard up to five million cloud workloads, with up to 40% belonging to Fortune 100 corporations like Siemens, BMW and Slack. Founded in 2020 by former members of Israel’s cyber intelligence unit, the firm was a major beneficiary of the mass shift to remote working across the West in response to the Covid-19 pandemic, as major firms rushed to secure their cloud workloads.
Google’s parent, Alphabet, is thought to have viewed Wiz’s acquisition as a means to shore up its cloud security credentials. Such a deal would have boosted the profile of its Google Cloud division which, though it generated revenues of some $33bn last year, still lags behind rivals Microsoft Azure and AWS in global market share.
Talks appear to have broken down over price, however – even though a funding round in May valued Wiz at $12bn, well short of the price Google was offering for the startup. “While we are flattered by offers we have received,” the firm told its staff in an email, “we have chosen to continue on our path to building Wiz.”
Regulatory waters choppy for major tech M&A deals
Whether or not such an acquisition would have passed regulatory muster if it had proceeded is an open question – a factor that, according to sources quoted in the FT, appeared to have also been a factor in the deal’s demise. For its part, Google faces two trials in the US about its alleged dominance of the digital ads and search markets and potential investigations in the EU and the UK over its activities in the value chain for generative AI.
Similarly-sized deals have also been scuppered by increased regulatory scrutiny in recent years. Last year, Adobe jettisoned plans to buy Figma, a rival design software startup, for $20bn after sustained objections from competition watchdogs in the EU and the UK. In January, meanwhile, EU objections led to Amazon abandoning a $1.4bn deal to buy Roomba-maker iRobot.
