Alphabet, Google's parent company, is pouring its largest ever amount into the acquisition of the cybersecurity startup "Wiz." The acquisition price is said to be a staggering 46.8 trillion won. As the AI competition among global big tech corporations intensifies and each company moves to enhance its cloud business, the valuation of cybersecurity companies is skyrocketing.
◇ The importance of cybersecurity in the AI era… severe damage if cloud is breached
On 18th (local time), Google announced that it has signed an acquisition agreement with the cybersecurity startup Wiz for $32 billion (approximately 46.8 trillion won). This amount is $9 billion higher than the $23 billion offered during last year’s acquisition efforts and is said to be the largest merger and acquisition (M&A) in Google's history. The acquisition amount is more than 2.5 times the price paid for Motorola Mobility in 2012 ($12.5 billion).
Wiz is a cloud security solutions company that has technology to identify and eliminate security risks in data stored in the cloud. The company, founded in 2020 by Asaf Rappoport, a cybersecurity expert and former Microsoft (MS) executive from Israel, has major cloud corporations like Google, Amazon, and MS as clients.
Google noted regarding this acquisition, "Defending against new threats and protecting national security are becoming increasingly important," adding, "We are investing in Google Cloud to accelerate cloud security improvement and multi-cloud capabilities in the AI era."
The surge in Wiz's valuation is attributed to big tech companies investing heavily in cloud business over the past few years. Security is critical in the cloud business since essential customer data is stored in the cloud, and the damage can be severe if it is hacked. Market research firm MarketsandMarkets predicts that the global cybersecurity market size will grow from $19.04 billion (approximately 264.84 trillion won) in 2023 to $29.85 billion (approximately 415.2 trillion won) by 2028.
In 2022, Google also acquired the cybersecurity companies Mandiant ($5.4 billion) and Simplify ($500 million). Mandiant was founded in 2004 by former special agents of the U.S. Air Force. It provides cybersecurity attack detection and analysis services that track cyberattacks from countries like Russia, Iran, and North Korea. After acquiring these two companies, Google Cloud's revenue increased from $26.28 billion in 2022 to $43.29 billion last year.
◇ MS, Amazon, and IBM also "shopping" for security companies
Google's competitors are also actively pursuing mergers and acquisitions in the cybersecurity sector. MS acquired "CloudKnox Security," a cloud access management platform, and threat intelligence provider "RiskIQ" in 2021. MS has also invested in the cybersecurity startup Rubrik, which offers services to protect data stored in the cloud and successfully went public (IPO) last year. MS's security sector revenue surpassed $20 billion for the first time in 2023.
Amazon has been investing in cybersecurity companies to strengthen the security of its Amazon Web Services (AWS) cloud service. It acquired the threat detection company Squarrel in 2018, followed by Harvest AI in 2017 and CloudEndure in 2019. In 2021, it invested in the free encrypted messenger app Wickr Me.
IBM acquired the cybersecurity company "Randori" in 2022. Randori, founded in 2018, is a company that provides attack surface management (ASM) solutions to identify and address publicly disclosed vulnerabilities. Cisco acquired the cybersecurity and analytics company Splunk for $28 billion (approximately 40 trillion won) last March.