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Founded in 2020, Wiz has rapidly established itself as a major player in the cybersecurity field. The company focuses on cloud security, a fast-growing sector with the increasing adoption of online services by businesses worldwide. In just a few years, Wiz has won over a host of customers, including Fortune 500 companies, thanks to its innovative technology capable of detecting and correcting vulnerabilities in cloud environments. This meteoric rise to prominence has attracted the attention of some of tech's biggest players, including Google, who saw in Wiz a huge potential for strengthening its own portfolio of cloud services.
In July 2023, the American press revealed that Google had proposed a $23 billion buyout to acquire Wiz. This sum represented a doubling of Wiz's valuation compared with its last fundraising, demonstrating the strategic importance Google attached to this acquisition. For Alphabet, this operation was not only a question of strengthening its presence in the cybersecurity field, but also an attempt to catch up with Microsoft and Amazon, its two main competitors in the cloud services market.
Despite the enormity of the offer, Wiz decided to turn it down. The main reason put forward by the start-up is the threat of possible antitrust proceedings. In the United States, regulators have stepped up their scrutiny of major technology companies, and Google is already the target of two antitrust actions. In particular, the U.S. Department of Justice accuses Google of abusing its dominant position in search engines and digital advertising tools. A new acquisition of this magnitude would very likely have attracted even more attention from regulators, risking the delay, or even cancellation, of the deal.
In an e-mail to his employees, Wiz CEO Assaf Rappaport expressed his desire to continue developing the company independently. He stressed that although Google's offer is flattering, the Wiz team is convinced that it can continue to grow without being absorbed by a tech giant. Wiz is now aiming to reach $1 billion in annual revenues, and is considering a stock market flotation in the next few years.
Wiz's refusal to sell out to Google is undeniably audacious. In a sector as competitive as cybersecurity, turning down such a large sum could be seen as taking a risk. However, the decision reflects a clear confidence in the company's ability to thrive on its own. By remaining independent, Wiz retains full control over its vision, products and market strategy, which could enable it to continue innovating without the constraints sometimes imposed by a large corporation.
However, this choice also entails risks. By refusing Google's offer, Wiz remains exposed to the challenges inherent in its sector. Cybersecurity is a constantly evolving field, where new threats regularly emerge and competition is fierce. To maintain its lead, Wiz will have to continue to innovate and stand out from the crowd, while at the same time facing up to competitors with the resources and expertise to do so.
For Google, the failure of this acquisition is a major blow. The tech giant has invested heavily in strengthening its cybersecurity capabilities, an increasingly crucial area as businesses migrate their operations to the cloud. In 2022, Google bought Mandiant, another cybersecurity start-up, for $5.4 billion, strengthening its offering in this field. However, the acquisition of Wiz would have been a significant leap forward, enabling Google to better compete with Microsoft and Amazon in the cloud services market, where security has become a key differentiator.
This failure also shows the challenges Google faces in its acquisition strategy. Increasingly vigilant regulators are complicating major M&A operations, particularly for already dominant companies like Google. This context could force Alphabet to review its growth plans and explore other avenues to strengthen its position in the cloud.
Despite the rejection of the offer, it's not out of the question for Google and Wiz to resume talks in the future. Negotiations of this magnitude are often full of twists and turns, and it's not uncommon for companies to put proposals back on the table after a while. If market conditions or company objectives change, it's possible that Wiz will be more open to a tie-up with Google or another major player.
For the time being, Wiz seems determined to go it alone, but the temptation of an even more tempting offer in the future could lead the start-up to reconsider its position. What's more, if Wiz continues to grow at a rapid pace, it could itself become a major player, capable of competing with the biggest without needing to sell out.
