Google’s latest acquisition is its most expensive yet — and perhaps its riskiest, too. On Tuesday, the search giant announced that it acquired the cloud security startup Wiz for $32 billion. It’s a major bet that Wiz can help beef up Google’s cloud business, which makes far less money than the offerings built by its biggest rivals. But to do that, Google faces real challenges integrating this expensive acquisition and dodging regulatory concerns around what’s certain to be a high-profile purchase.
Both Microsoft and Amazon have profited handsomely from the AI cloud gold rush, with their cloud services reporting revenues reaching $105.4 billion and $107.6 billion, respectively, during fiscal year 2024. Google, on the other hand, is a minor player in comparison; its cloud revenue surpassed just $43 billion in 2024. With the AI boom showing no signs of stopping, Google may have found a way to shrink the gap with its fellow tech titans, even if it has to spend billions of dollars to get there.
“Security is a fundamental priority for CEOs and government leaders around the world, but the landscape is changing,” Google CEO Sundar Pichai said during an investors call. “The pace and impact of breaches are accelerating. AI brings new risks, but also new opportunities… Together, we believe this and Google Cloud can accelerate the ability of organizations to improve their security.” The deal will bring Wiz under the Google Cloud umbrella.
Though Google was in talks to purchase Wiz last year for $23 billion, Wiz backed out due to concerns about pushback from federal regulators and plans to file for an initial public offering. With the more merger-friendly Trump administration in control, the companies may be able to forge a path beyond regulatory hurdles.
Founded in 2020, Wiz has rapidly become one of the fastest-growing software companies in the world. Its leadership team has a history of success in cloud startups: Wiz CEO Assaf Rappaport and several members of his executive team were also behind Adallom — the cloud security startup that Microsoft bought for $320 million in 2015 and later rebranded as Microsoft Defender for Cloud Apps.
Google’s acquisition of Wiz is a “shot across the bow at Microsoft and Amazon”
Coupled with what Forbes calls a “hyper-aggressive” approach to business and maintenance-free cloud security software, Wiz is making a killing in the ever-growing AI industry. It offers a solution called agentless security, which means companies don’t have to spend hours deploying individual security programs — or agents — on every device they want to secure. It connects to a cloud environment remotely, allowing experts to oversee their setup using a digital twin, or a copy of a cloud setup that they can use to simulate the impact of potential threats.
Other companies, like Palo Alto Networks and CrowdStrike, offer similar security tools. But Wiz’s execution is different. “Anybody can do agentless,” Neil MacDonald, a VP and distinguished analyst at Gartner, told The Verge last year. “It’s how you stitch together and build this digital twin model and identify, prioritize and help customers, remediate risk… That is what they’re [Wiz] really, really good at.”
Wiz also offers a user-friendly UI that MacDonald says is one of “the best” in its category. One tool presents a web chart that shows all the connections in a cloud environment and how a breach could impact it, while another continuously scans a cloud setup to find and identify risks. These kinds of features will only become more important as major companies — and their users — entrust their data to the cloud, whether it’s for storage or to process requests with AI.
As a deluge of AI startups continue shopping around for a cloud provider, they might take Google Cloud’s integration with Wiz into account. The company bills itself as serving “customers of every size of business — from startups to Fortune 100s.” Wiz’s marketing has paid off, with Rappaport scaling the startup from $1 million in annual revenue to $100 million in just 18 months in 2022. Wiz has since hit $350 million in annual revenue, and nearly half of all of the companies in the top 100 of Fortune’s 500 list use the software. In May 2024, the startup raised $1 billion, putting the company’s valuation at around $12 billion.
For Google, that far-reaching audience is a huge advantage. The search giant might use this acquisition as an opportunity to convert some of Wiz’s customers to Google Cloud, according to a 2024 report from The Information. Currently, OpenAI uses Microsoft Azure to run its AI services, while Anthropic — the AI company behind Claude — runs on both AWS and Google Cloud. Another AI company, Midjourney, selected Google Cloud as its provider. And with Microsoft’s cybersecurity practices facing increased scrutiny, it’s good timing for Google to get in on the cloud security game.
Customers don’t even have to choose Google Cloud as their provider for Google to benefit. Since Wiz integrates directly with the services offered by Google, Amazon, Microsoft, Oracle, and others, Google can establish itself as a security provider beyond its cloud offering. Aside from Wiz, Google’s growing security portfolio includes Mandiant, VirusTotal, and Chronicle (now known as Google Security Operations). “Google wants to become a serious enterprise security vendor,” MacDonald said. “Wiz helps to strengthen its credibility as an enterprise security player.”
“For Google this would be a shot across the bow at Microsoft and Amazon, making a major bet on the cyber security space,” Wedbush analyst Dan Ives wrote in an investors note when the deal was first rumored last year. “This would give Google an edge on a number of cloud deployments and further monetize the cyber security cloud space with still less than 50% of the workloads not on the cloud globally.”
But the deal doesn’t come without its risks. Google’s parent company, Alphabet, agreed to a reverse termination fee of $3.2 billion, according to a report from the Financial Times, which calls the amount “among the highest of all time.” It dwarfs the $1 billion Adobe paid to Figma after it abandoned its $20 billion acquisition and the $94 million Amazon paid to iRobot.
Even with President Donald Trump in office, Google is still expected to draw scrutiny from federal regulators. Andrew Ferguson, Trump’s pick for the chair of the Federal Trade Commission, said in a February memo that he would retain the merger guidelines devised under the Lina Khan-led FTC in 2023. Still, Ferguson has indicated being “more open to using settlements to resolve concerns about proposed mergers, rather than suing to block potentially problematic deals in every instance,” as reported by The Wall Street Journal.
Google is also in the midst of an active antitrust case that could force the company to sell Chrome, a recommendation federal Judge Amit Mehta reaffirmed earlier this month. A separate antitrust trial, which accuses Google of monopolizing the advertising technology market, concluded late last year. With its acquisition of Wiz, Google will inherit the patent infringement lawsuit the startup is facing from the cloud cybersecurity company Orca. In the suit, Orca accuses Wiz of “ongoing, and unauthorized use of Orca’s patented technologies.”
Aside from potential legal issues, Google has struggled to integrate large acquisitions in the past, such as the $12.5 billion purchase of Motorola Mobility in 2012, which was largely viewed as a failure. Later on, Google’s $3.2 billion Nest acquisition led to chaotic restructuring and the departure of the smart home brand’s founder and former CEO.
Google’s $32 billion bet is that the opportunity here is far bigger than any of these concerns — Wiz could put Google’s services on the map at a turning point for cloud computing and AI.
