There’s a huge qualifier on Tuesday in the big news that Google is getting its security startup Wiz for a record $32 billion.
Google says it will position Wiz as a provider of “Multicloud.” This means that Wiz is not a Google-only shop.
In reality, Google had no choice but to do this. A closer look at the reasons behind the decision highlights the weaknesses Google is aiming to fill out on the Wiz.
Customer retention
Wiz brings Google a large list of customers. As of today, the startup has already reached an annual return of $700 million. Before the news broke on Tuesday, it was on track to grow to $1 billion.
“Before the news breaks” is the surgical phrase here.
Google and Wiz certainly hope that this acquisition will create an interesting new funnel for customers and revenue. But first and foremost, both require that existing customers not shop for another security provider.
Many of these customers already use hybrid cloud deployments and may not be able to use Google Cloud at all. One of the main reasons why some of them chose WIZ in the first place was their ability to support multiple cloud platforms.
If Google cuts off its capabilities, there is a risk of alienation for those users.
That’s why Wiz CEO Assaf Rappaport and other senior leaders have set aside $1 billion above $32 billion to maintain all their talent as they move to Google.
Anti-Trust Regulations
When news broke that Alphabet/Google was considering acquiring Wiz last summer, speculation quickly continued about the regulatory challenges of driving such a large-scale deal. Google has been under antitrust scrutiny for many years, especially due to its advantages in areas such as search, mobile operating systems, and advertising.
Since then, the regulatory environment has changed. The United States under President Trump has yet to hear of any major antitrust cases, and there are mixed opinions on how his administration approaches big technology. Some believe that large tech companies still face obstacles. Others – looking at long-term trends like Microsoft, getting approval to buy Activision – I think the Big Deal window is open again.
“It seems like the fact that Google feels like it can once again reflect on a big M&A,” my colleague Natasha told me. “Do they think the Trump administration is on its side?”
Meanwhile, in smaller but influential markets like the UK, regulators have recently taken a more favorable stance towards big technology as part of a broader push that shows that “the UK is open to business.” The so-called hyperschool may view this as an opportunity to emerge from M&A sleep.
Even if the regulated climate remains challenging for Big Tech M&As, Google’s “Multicloud” positioning could help.
Cloud services and cybersecurity are not the two areas currently controlled by Google, so this transaction alone may not raise the anti-trust alarm bell.
However, if regulators are scrutinizing Google’s overall advantage, emphasizing Wiz’s ability to work on various cloud platforms could be useful for Google’s arguments of supporting competition.
Google Cloud can’t keep up with AWS and Azure
The last reason Google had to adopt the Multicloud model is simple. Many customers don’t use and don’t use Google Cloud. As of the fourth quarter of 2024, Statista data shows that AWS had a 30% share of the global cloud market, with Azure ranked second with 21%. Google Cloud is progressing significantly behind at 12%.
Why is Google so far? Some say it’s because AWS got off to a faster start on the field. Others cite Microsoft’s enterprise domination and a strong ecosystem including Openai partnership. Google doesn’t have the advantage of both.
A few years ago, people wondered if Google could fill the gap given that cloud delivery is comparable to AWS and Azure.
“Google Cloud has always been a bit of a mystery regarding its third place in cloud infrastructure market share,” former TC writer Ron Miller told me today. “They run the world’s largest cloud applications, but they struggle to convert them into products aimed at corporate customers.”
He believes it has changed under current Google Cloud CEO Thomas Kurian. “He’s much more reliable with corporate customers,” says Miller. “They have grown rapidly over the past few years and have a fairly fulfilling business, but they still lag behind Amazon and Microsoft in terms of revenue.”
It’s worth noting that in an investor call on Tuesday, Kurian highlighted Google’s pursuit of Wiz for its multi-cloud capabilities.
“Multicloud is what our customers want,” he said. “A commitment to MulticLoud means new IT projects that allow organizations to work with existing IT investments in Google Cloud, allowing them to choose from a variety of vendors for future products.”
But Kurian also believes that AI might change the game.
Rather than relying on central cloud providers, AI architectures usually look at large corporate pool data from multiple locations, Kurian said. This means that multi-cloud protection is more important than centralized data security.
MulticLoud “helps identify, protect and defend cyber threats in all major clouds and on-premises systems,” Kurian said.
Now we’ll see if regulators and end users will buy it.