Alphabet Inc.’s Google’s proposed $32 billion acquisition of cloud security startup Wiz is drawing early-stage antitrust scrutiny from the Department of Justice.
The all-cash deal, which would integrate Wiz into Google Cloud, has antitrust enforcement officials investigating whether it could illegally limit rivals’ access to advanced security tooling, according to a Bloomberg report. The renewed probe comes a year after Wiz abandoned a $23 billion offer, also from Google, amid similar regulatory worries.
Google and Wiz weren’t completely caught flat-footed by the latest DoJ probe: The companies were anticipating opposition to their latest attempt, with Google agreeing to a $3.2 billion breakup fee should things collapse.
Indeed, Wiz isn’t the only cybersecurity acquisition that has put Google in the cross-hairs of the DoJ. In 2022, the agency reviewed Google’s $5.4 billion purchase of Mandiant before the transaction was ultimately approved.
A Justice Department investigation is likely to take months, delaying Google’s aggressive ambitions to differentiate its cloud offering from Amazon.com Inc. and Microsoft Corp. through bespoke security services.
Acquiring Wiz is a key component of expanding and enriching Google’s cybersecurity product portfolio that includes threat intel and security operations technologies from Mandiant and Siemplify. Analysts expect a Google-Wiz tandem to reshape the competitive landscape with Microsoft Corp. and alter how investors look at funding cloud security startups.
Success in enterprise cybersecurity has long eluded Google, but the addition of Wiz, combined with Mandiant, should help Google meld reactive and proactive security solutions, analysts say.
“Since most enterprises are formulating a hybrid cloud approach, and including on-prem, they are looking for a security provider that can cover all aspects of their compute infrastructure needs. Google sees that as well which is why they are interested in Wiz (and potentially others),” technology analyst Jack Gold said in an email. He believes DoJ will ultimately OK the deal.
More importantly, the addition of Wiz, which has rapidly gained business from Fortune 500 companies, should give Google leverage in its pursuit of an estimated $12 billion in cloud-security spending this year as enterprises race to secure hybrid and multi-cloud environments.
For Google, the early-stage probe of Wiz adds to a long laundry list of antitrust headaches. Antitrust officials recently informed Google they are examining the structure of an agreement with Character.AI last year and if it attempted to sidestep a formal government merger review when it hired Character.AI’s founders last year and received a non-exclusive license.
Separately, the Justice Department is seeking to break up both Google’s online search business and its digital advertising technology business in two cases. In May, the Federal Trade Commission backed the DoJ’s proposal to make Google share search data with competitors. A decision in the search case is expected by August.
