The planned Wiz acquisition positions Google Cloud to be a much more credible rival to Microsoft — while also highlighting how cybersecurity is ‘becoming a battle of well-funded, large competitors,’ Gartner’s Neil MacDonald tells CRN.
Google’s stunning deal to acquire Wiz for $32 billion makes it clear to the market that the tech giant has every intention of becoming a “strategic” cybersecurity vendor and is more than ready to do battle on Microsoft’s turf, according to Gartner’s Neil MacDonald.
In an interview with CRN, MacDonald said that the all-cash deal announced Tuesday would, upon closing, give Google Cloud an immediate leadership position in the cloud and AI security markets where Wiz has been a trailblazer.
[Related: Google Cloud-Wiz ‘Absolutely’ Puts Heat On Microsoft, AWS Security: Partners]
With the planned acquisition, Google is “buying a leader in a segment of the market that’s growing rapidly,” he said. “Google is really showing the world that it’s serious about being an enterprise security player, much in the way that Microsoft is.”
CRN has reached out to Microsoft for comment. The deal is subject to regulatory approval and other closing conditions, though MacDonald and other analysts have said they see an antitrust challenge as unlikely.
The Google Cloud security business has already been growing steadily in recent years, including through prior M&A activity such as the $5.4 billion acquisition of incident response and threat intelligence powerhouse Mandiant in 2022. The series of deals has formed the basis for the Google Security Operations platform, which has been a commercial success during its first few years, according to MacDonald.
However, there’s no question that for much of the market, Google Cloud currently is “just not known for being an enterprise security player,” he said. “Today, I don’t think organizations would say [Google is] a top 10 strategic security vendor. But Google’s vision, I believe, is that within five years people would identify them as a strategic vendor.”
Will the gambit work? While Google Cloud still has some gaps to fill when it comes to cloud security capabilities, the acquisition of Wiz should go a long way toward helping the company to change perceptions about its cybersecurity business, MacDonald said.
Particularly in Wiz’s core area of cloud security posture management (CSPM), the five-year-old company is “a large player [and the vendor] most frequently mentioned by Gartner clients on inbound inquiries,” he said. “So Google is buying a position of strength in this market.”
At the same time, even with the addition of Wiz, it’s obvious that Google would still remain a much smaller enterprise security player than Microsoft in terms of revenue, MacDonald said.
Microsoft last disclosed the size of its security business more than two years ago, at which point it had reached $20 billion in revenue — a figure that is undoubtedly much higher now.
Even with Wiz, “the enterprise security business of Google is a fraction of Microsoft,” MacDonald said. “But they aspire to grow that enterprise security credibility and that enterprise security revenue.”
Wiz reportedly saw its annual recurring revenue reach $500 million last year with an expectation to cross $1 billion in ARR this year.
Deal ‘Raises The Bar’ For Security Industry
Founded in 2020, Wiz has stood out by offering capabilities that rapidly improve visibility into cloud environments, enabling partners and customers to quickly fix misconfigurations and other security gaps in the cloud. Notably, it’s an approach the company is now extending to the AI security space.
At $32 billion, the Wiz deal would be Google’s highest-priced acquisition to date as well as the largest acquisition of a standalone security vendor ever.
Without a doubt, Google’s well-endowed ambitions in cybersecurity have massive implications that go far beyond the heightened competition with Microsoft, according to MacDonald.
For the cybersecurity industry as a whole, the Google-Wiz deal definitively “raises the bar and makes it difficult for some of these smaller players to compete effectively against these large players,” he said. “This is becoming a battle of well-funded, large competitors.”
