Google’s $23 Billion Wiz Deal Collapses: What’s Next for Big Tech’s AI Acquisition Spree?
In a surprising turn of events, Google’s ambitious $23 billion bid to acquire cloud security startup Wiz fell through in 2024, marking a significant setback in the tech giant’s acquisition spree to bolster its cybersecurity capabilities. The deal, which would have been Google’s largest acquisition to date, collapsed after weeks of intense negotiations and speculation.
Wiz, founded in 2020 by former Microsoft cybersecurity experts, has rapidly become a unicorn in the cloud security space, reaching a valuation of $10 billion in its last funding round. The company’s innovative approach to cloud infrastructure security had caught the eye of Google, which saw an opportunity to strengthen its Google Cloud offerings and compete more effectively with rivals Microsoft Azure and Amazon Web Services.
Regulatory Challenges: A Roadblock in Google’s Acquisition Spree
According to sources close to the matter, the deal fell apart due to a combination of factors. Wiz’s leadership, including CEO Assaf Rappaport, reportedly felt that the company could achieve greater long-term value by remaining independent and pursuing an IPO.
In an internal memo, Rappaport stated, “While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz. Our next milestones are $1 billion in ARR and an IPO.”
Regulatory concerns also played a role in the deal’s collapse. With increased scrutiny on Big Tech acquisitions, both Google and Wiz were wary of potential antitrust hurdles. The specter of a prolonged regulatory review process, similar to what Microsoft faced with its Activision Blizzard acquisition, likely contributed to the decision to abandon the deal.
This failed acquisition stands in stark contrast to Google’s recent successful purchases. In 2022, Google acquired cybersecurity firm Mandiant for $5.4 billion, its largest deal in the past five years. Other notable recent acquisitions include Fitbit for $2.1 billion in 2021 and Looker for $2.6 billion in 2020[3]. According to the site Tracxn:
“ Google has completed 262 acquisitions
The collapse of the Wiz deal raises questions about Google’s M&A strategy in the AI era. Don Harrison, Google’s head of corporate development, now faces increased pressure to identify and secure deals that can enhance the company’s AI capabilities while navigating a complex regulatory landscape.
For Big Tech companies, the stakes in the AI arms race have never been higher. As AI becomes increasingly central to product offerings and competitive advantage, acquiring the right companies with cutting-edge AI technology and talent is crucial. However, the Wiz case demonstrates that even with deep pockets, closing these deals is far from guaranteed.
Looking ahead, Google’s corporate development team will likely refocus on smaller, more strategic acquisitions that can fly under the regulatory radar while still providing valuable AI and cybersecurity capabilities.
A great example of such a deal is Google’s most recent acquisition, Cameyo an
Google has also become increasingly active in the startup community running multiple Google for Startup batches helping sign-post outstanding startups while also uncovering what could be remarkable deal flow for the company down the road. The company ran an AI batch in London in 2024 and provided mentorship and a significant platform to participating companies.
As for Wiz, the company’s decision to pursue an independent path and potential IPO will be closely watched by the tech industry. If successful, it could inspire other high-growth startups to resist the allure of Big Tech acquisitions in favor of charting their own course.
The failed Wiz acquisition serves as a reminder that in the high-stakes world of Big Tech M&A, not every deal comes to fruition. As the AI revolution continues to reshape the technology landscape, the ability to successfully execute strategic acquisitions may well determine which companies lead the pack in the years to come[1][2][4][5].
Sources
[1] Cyber security startup Wiz reportedly rejects $23 billion acquisition … https://apnews.com/
[2] Google’s corporate goals for 2024 have been leaked – TechRadar https://www.
[3] Infographic: Google’s Biggest Acquisitions – CB Insights https://www.
[4] Why Wiz Rejected the Google Acquisition Offer – Channel Futures https://www.
[5] It took some serious nerve for Wiz to walk away from Google’s $23B … https://techcrunch.com/
[6] 2024 Merger and Acquisition Trends: Deal volumes cool, values … https://www.scworld.com/
[7] A Deep Dive into Google’s M&A Strategy: Key Factors for Acquisition … https://etonvs.com/ma/a-
[8] List of mergers and acquisitions by Alphabet – Wikipedia https://en.
[9] Google parent Alphabet may acquire CRM leader HubSpot https://techwireasia.
[10] AI spending spree: Big tech’s quarterly results draws scrutiny https://gulfbusiness.
[11] Google’s $23 Billion Wiz-Bang Deal Fizzles: What Happened? https://www.
[12] Google Plans More Layoffs in 2024 | Dice.com Career Advice https://www.dice.com/
[13] Google – M&A Summary and Business Overview – Mergr https://mergr.com/
[14] Google-Wiz $23bn deal collapses – TechInformed https://
[15] Google’s Acquisition Spree: A Journey Through 2023’s Deals https://salestechstar.
