Alphabet's $32bn Acquisition of Wiz
- katerinageorgiou5
- 5 days ago
- 5 min read
By Aman Prasad, Andrea Defilippi, Jase Lall, Jill Shah, Sharmell Sonia D’Silva (University of Birmingham); Terry Zhang, George Luo (The University of British Columbia)
Photo: Fabio (Unsplash)
Overview of the deal
Acquirer: Alphabet Inc. (Tickers: GOOGL, GOOG)
Target: Wiz, Inc.
Implied Equity Value: $32bn
Expected closed Date: Q1, 2026
Target Advisors: Goldman Sachs (Financial), Swaine & Moore (Legal)
Acquirer Advisors: Bank of America (Financial), Freshfields Bruckhaus and Cleary Gottlieb Steen & Hamilton (Legal)
Alphabet, Google’s parent company, has announced its acquisition of Wiz, a leading online cloud security firm, for $32bn. This marks Alphabet’s largest cybersecurity acquisition to date, highlighting its strategic push to strengthen Google Cloud’s security features.
Wiz, founded in 2020, has grown significantly and become one of the fastest-growing software startups, landing major clients such as Morgan Stanley. Its platform offers an elite real-time threat detection system across major cloud environments, aligning with the Google Cloud infrastructure.
The acquisition is seen as somewhat tactical, aimed at defending against the growing competition from Microsoft and Amazon in their cloud security service advancements. Although Alphabet has invested internally in cybersecurity, Wiz’s proven technology, operations, and strong client base made the acquisition a more compelling investment than developing a new system in-house.
Post-acquisition, Wiz will retain operational independence but integrate with Google Cloud to accelerate improvements in cybersecurity and increase customer reach.
Company Details (Acquirer - Alphabet Inc.)
Alphabet Inc. (Tickers: GOOGL, GOOG), is a world-renowned, American multinational technology conglomerate holding company, reputed for being the parent company of Google LLC. Established in 2015, through a corporate restructuring of Google, Alphabet is the third-largest technology company by revenue. It has over 250 acquisitions to date, across a wide range of industries, including healthcare, information technology, e-commerce and media.
Founded in 2015, headquartered in Mountain View, California, USA
CEO: Sundar Pichai
Number of employees: 83,323 (as of 31/12/2024)
Market Cap:Â $1.87tn
Enterprise Value (EV): $1.80tn
LTM Revenue: Â $350.02bn
LTM EBITDA: $129.50bn
LTM EV/Revenue: 5.15x
LTM EV/EBITDA: 13.91x
Recent Transactions: $250mn XR agreement with HTC Corp. (Jan 2025), undisclosed acquisition of Cameyo Inc. (Jun 2024), undisclosed acquisition of Photomath, Inc. (March 2023)
Company Details (Target - Wiz, Inc.)
Wiz, Inc. is an Israeli-American cloud security company that provides a platform for analyzing computing infrastructure hosted in various cloud environments, including Amazon Web Services, Microsoft Azure, Google Cloud Platform, Oracle Cloud Infrastructure, and Kubernetes. The company's platform identifies combinations of risk factors that could allow malicious actors to gain control of cloud resources or exfiltrate valuable data.Â
Founded in 2020, headquartered in New York, USA
CEO: Assaf Rappaport
Number of employees: Â Approximately 1,995 (as of November 2024)
Total funding: $1.5bn
Post-money valuation: $12bn
Projections and Assumptions
Short-Term Consequences
Alphabet’s acquisition of Wiz will mean that Wiz will be integrated into the Google Cloud. However, Wiz will still operate as an independent entity and even work with competing firms, allowing them to maintain their successful company culture, remain more agile and continue to innovate at pace.
This will allow Alphabet to position itself strongly in the growing trend for increased cloud security. Google is already a leader in the Cloud space, but this acquisition could present a new avenue for increased growth through cybersecurity. Google has already invested significantly in cloud security internally, but Wiz’s product is suitable for businesses of any size, and even public organisations, due to its ease of use and effectiveness. So, this will allow Alphabet to expand its offerings and revenue streams while protecting itself from competitors in this space, such as Amazon and Microsoft. This deal is even said to improve cybersecurity while lowering the cost to consumers.Â
The downside risk of this deal is the risk that regulatory bodies may block it from going through, due to competitiveness concerns. This is especially a concern for Alphabet as a termination fee of more than $3.2 billion - one of the highest in M&A history - was agreed on. Wiz is Alphabet’s largest acquisition to date and, hence, one of its most significant risks.
Finally, the markets did not respond well to the news, with Alphabet’s stock dropping around 3% in reaction to the news due to growing concerns about excessive AI spending and a growing negative sentiment surrounding US equities, driven by tariff and regulatory uncertainty.
Long-Term Upsides
The transaction positions Google to capitalize on the rapidly expanding cloud security market. The global cloud security market is projected to grow from approximately $30.3 billion in 2023 to around $100.1 billion by 2032, reflecting a CAGR of 14.2%. The strategic move enhances Google's competitiveness in a sector where it has traditionally trailed behind Amazon Web Services and Microsoft Azure. From a market expansion perspective, Wiz serves over 40% of Fortune 100 companies, offering Google a valuable opportunity to grow its enterprise customer base. By leveraging Wiz’s existing relationships, Google can accelerate its growth in the cloud services market.
As cyber threats become more sophisticated, leveraging AI for threat detection and response has become essential. Wiz’s strengths in this area, combined with Google’s robust AI infrastructure, can enable the development of advanced security solutions, providing a clear competitive edge. Broadly speaking, Wall Street analysts suggest this deal could trigger a wave of M&A in the cloud security space, as competitors move to strengthen their offerings in response to Google’s expanded capabilities.
As the largest tech M&A deal of Q1 2025, this acquisition serves as a bellwether for how regulators, public investors, and competitors interpret the current environment. Should this deal face significant delays or enforcement actions, it may dampen sentiment for other high-profile tech transactions in the pipeline.Â
Risks and Uncertainties
This transaction is Alphabet’s largest-ever acquisition and comes amid heightened scrutiny from U.S. and global regulators. Alphabet has a pending DOJ antitrust lawsuit related to its alleged dominance in the internet search market, and dealmakers remain uncertain about the new Trump administration’s actual enforcement stance on M&A. While Trump-era policy is generally perceived as more business-friendly, the administration’s regulatory posture is still evolving.
A relevant precedent is Google’s $2.1 billion acquisition of Fitbit, which faced prolonged antitrust scrutiny and conditional approval, despite its smaller size and lower strategic impact. Given Wiz’s multi-cloud compatibility and deep access to enterprise cloud infrastructure, regulators may fear further horizontal consolidation or data dominance risks, especially if Alphabet prioritizes integration into Google Cloud.
On the other hand, Wiz’s current strength lies in its vendor-agnostic security platform, serving 40% of the Fortune 100. A key uncertainty is whether Wiz can retain this neutrality post-acquisition. Any perception of Google bias or exclusivity could trigger customer churn, particularly among enterprise clients who value cross-cloud functionality.Â
The all-cash consideration of $32 billion, at nearly 64x ARR (based on Wiz’s latest reported ARR of $500 million), and a 2.5x premium over Wiz’s last reported valuation of $12 billion, reflects aggressive pricing in a high-growth sector. Alphabet is effectively pre-paying for future growth, which could backfire if macroeconomic headwinds dampen enterprise IT spending or if cyber solutions pricing comes under pressure. Furthermore, the $3.2 billion reverse termination fee exposes Alphabet to significant sunk costs if the deal is blocked. This also raises questions about capital allocation discipline, especially amid broader cost-control efforts across Alphabet’s experimental and moonshot divisions.
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"Becoming part of Google Cloud is effectively strapping a rocket to our backs. Furthermore, the acquisition by Google will accelerate our rate of innovation faster than what we could achieve as a stand-alone company." - Assaf Rappaport, Wiz CEO