Alphabet, the parent company of Google, has announced an agreement to acquire cloud security company Wiz for $32 billion in cash, making it the largest acquisition in the company's history.

This agreement follows a prior unsuccessful attempt last summer, during which Wiz shareholders rejected an offer of $23 billion over concerns related to potential regulatory issues.

The acquisition is subject to regulatory approval; if it fails to secure the necessary authorizations, Google has agreed to pay approximately $3.2 billion to Wiz.

According to Alphabet, this acquisition is intended to bolster its Google Cloud division by addressing two significant trends in the era of artificial intelligence: enhancing cloud security and improving multicloud capabilities.

The deal could position Google more competitively against rivals Microsoft and Amazon in the fast-evolving cloud computing sector.

While Alphabet's cloud business has achieved profitability in recent quarters after years of losses, growth has begun to plateau.

Wiz, headquartered in New York, primarily operates its technology from Israel.

Founded in January 2020 by Assaf Rappaport, Yinon Costica, Roy Reznik, and Ami Luttwak, all of whom previously co-founded Adallom, the company aims to provide robust security solutions.

Rappaport serves as the CEO, while Costica, Reznik, and Luttwak hold positions as Vice President of Product, Vice President of Engineering, and Chief Technology Officer, respectively.

Upon the deal's completion, which is anticipated for next year, Wiz will be integrated into Google Cloud.

The company's platform analyzes computing infrastructures hosted on various cloud services, including Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, identifying vulnerabilities and risk factors against potential cyberattacks.

Wiz's offerings cater to a wide range of clients, including startups, large enterprises, governments, and public-sector organizations, helping them secure their cloud environments.

Products from Wiz are expected to continue operating on other major cloud platforms such as AWS, Azure, and Oracle Cloud, raising questions about future commercial relationships with Alphabet's competitors.

The cybersecurity and cloud computing sectors continue to experience significant growth.

The increasing prominence of AI and the adoption of cloud services have fundamentally altered the security landscape for clients, amplifying the importance of robust cybersecurity measures to guard against emerging risks and protect national security.

Sundar Pichai, CEO of Google, remarked in a statement that Google’s emphasis on security has positioned it as a leader in protecting users online.

He noted that with enterprises and governments increasingly seeking fortified security solutions and diverse cloud providers, the collaboration between Google Cloud and Wiz aims to enhance cloud security and multicloud capabilities.

Alphabet asserts that the integration of Wiz's technology with Google Cloud will significantly improve security design, operations, and automation, providing a comprehensive security platform for clients of all sizes amidst the ongoing evolution of AI. This integration is projected to lower the costs associated with implementing and managing security controls and to safeguard against new threats arising from advancements in AI, thus promoting the adoption of multicloud security solutions.

As of November 2024, Wiz employed around 1,995 personnel, primarily in sales and marketing roles across North America and Europe, while most of its engineering staff was based in Tel Aviv, Israel.

The company has demonstrated rapid growth and was considering either a sale or an initial public offering prior to this acquisition.

Rappaport described last year’s offer from Alphabet as ‘humiliating’, expressing a desire to build Wiz into an independent cybersecurity giant to compete against firms such as CrowdStrike Holdings and Palo Alto Networks.

Regulatory uncertainties were cited as a factor in the initial offer's rejection, which has led to the inclusion of a breakup fee of $3.2 billion in the current agreement.

In terms of Alphabet’s acquisition history, the purchase of Wiz stands out as its largest.

Previous significant acquisitions include Motorola Mobility for $12.5 billion in 2012, Mandiant for $5.4 billion in 2022, Nest Labs for $3.2 billion in 2014, and DoubleClick for $3.1 billion in 2007. The acquisition of YouTube in 2006 for $1.65 billion is widely considered one of Alphabet's most successful investments.

In 2024, Alphabet reported a revenue increase of 14% to $350.018 billion, with net income surging by 36% to $100.113 billion, largely driven by advancements in its AI-related business.

This performance marks Alphabet as the first private company to surpass $100 billion in net income within a single fiscal year.