- Google is spending big on Wiz to expand its multi-cloud security coverage
- The deal will notably give it a strong foothold in the emerging CNAPP market
- But there are questions about the price tag and whether the transaction will make it past regulators
Google this week struck a $32 billion deal to scoop up cybersecurity company Wiz, a move which has apparently been in the works for nearly a year. While the price tag might seem steep, analysts said there’s good reason the cloud giant is willing to fork over the cash.
“As enterprises move towards an increasingly hybrid cloud space, including on-prem instances, the ability to manage security uniformly across all instances becomes a key security and cost of ownership issue,” J. Gold Associates Principal Jack Gold noted on LinkedIn. Wiz, he added, has been a leader in this area. Thus, “this acquisition will increase the attractiveness of [the Google Cloud Platform] to many more customers” in an increasingly competitive hyperscale cloud market.
A focus on security is nothing new for Google. The company jumped into the cybersecurity market with both feet in 2022 with its $5.4 billion acquisition of Mandiant. And as Gartner VP Analyst Charlie Winckless told Fierce, the company already offers Google SecOps, Mandiant Cyber Defense and Google Security Command Center Enterprise, which offers support for AWS and to a lesser extent Microsoft Azure.
But Wiz adds key Cloud Native Application Protection Platform (CNAPP) capabilities that Google currently lacks as well as more extensive support for Azure, Winckless noted. Plus, Wiz currently serves more than 50% of Fortune 100 companies, Alphabet and Google CEO Sundar Pichai stated on a call with investors.
“It gives Google better coverage and a much more significant market presence in a rapidly growing market,” Winckless told Fierce via email. “CNAPP/CSPM is among the fastest growing markets that we track, and scales in revenue with the number of workloads in the major hyperscale cloud providers.”
As a refresher, CNAPP as defined by Dell’Oro Group “combines software security, deployment security, and runtime security technologies” to provide lifecycle protection for cloud applications. The CNAPP market hit $700 million in revenue in Q2 2024, with Wiz posting a whopping 94% year on year growth rate, according to Dell'Oro. It was tipped to reach $6 billion by 2028.
Wiz’s position in the market depends on who you ask, but it’s certainly up there among CNAPP providers. Gartner has it as the market share leader while Dell’Oro’s calculation of market share by revenue ranks it as a third place competitor that is rapidly closing the gap with the likes of Palo Alto Networks and CrowdStrike.
Writing about Google’s deal, Dell’Oro’s Mauricio Sanchez noted that Palo Alto recently rebranded its offering in a move to offer deeper integration and a more cohesive offering. “Google’s acquisition of Wiz strategically positions it to avoid similar pitfalls, acquiring a purpose-built CNAPP solution with better cohesion from day one, potentially accelerating adoption among enterprise customers,” he added.
Raising eyebrows
That said, Sanchez did acknowledge that the deal’s value raised some questions. As he pointed out, the $32 billion figure is higher than Zscaler’s $30 billion market value, despite Zscaler bringing in $2.4 billion in annual revenue compared to Wiz’s estimated $300 million-$400 million.
And in light of a recent move by regulators to block HPE’s much smaller $14 billion acquisition of Juniper, Sanchez said it’s only natural to question whether Google’s transaction will make it to the finish line.
Perhaps Google and Wiz have the same concern: The pair notably did not provide a estimated closing timeframe in their press releases. In the investor webcast, the pair said only that they are aiming to finalize the transaction sometime next year.