The big news on Tuesday was that Google is getting security startup WIZ for a record $32 billion, a very big qualifier. Google said it will position WIZ as a “multi-cloud” product, meaning that Wiz will not be just Google’s store.
The reality is that Google has no choice but to do so, and has carefully studied the reasons for the decision, and also highlighted Google’s weaknesses in the coming months.
Customer Retention
Wiz brings a large list of customers to Google. As of today, the startup has reached $700 million in annual revenue. It could grow to $1 billion before news broke on Tuesday.
“Before the news crash” is the surgical phrase here. Google and Wiz certainly hope the acquisition will create a new channel for interesting new customers and revenue, but first, both need to make sure they stop existing customers from surfing another security provider.
Many of these customers already use a hybrid cloud layout and may not use Google Cloud at all. One of the key reasons some of them chose Wiz in the first place is its ability to support multiple cloud platforms.
If Google cuts off this capability, it could alienate these users.
That’s why Wiz CEO Assaf Rappaport and other senior leaders called customers before the deal and assured them that it was as usual.
Antitrust Regulation
Last summer, when news of Alphabet/Google’s hope to acquire Wiz came out, regulatory challenges about driving such a big deal were quickly raised. Google has been under severe antitrust scrutiny for years, especially in areas such as search, mobile operating systems and advertising.
Since then, the regulatory climate has changed. The United States under President Trump has not heard of a major antitrust case, and there are different opinions on how his administration approaches large-scale technology. Some believe that big tech companies will still face obstacles. Others think the large transaction window opens again.
“Google feels it seems big to be able to consider large mergers again,” one source said. “Do they think they have the Trump administration on this side?”
Meanwhile, in smaller but still influential markets like the UK, regulators have recently taken a more favorable stance on Big Tech, part of a broader drive to indicate “UK open business”. The so-called high scores might think that this is an opportunity to stand out from the shadows.
Even if the regulatory climate for large-scale technology acquisitions is still tricky, Google’s “multi-cloud” positioning may come in handy. Cloud services and cybersecurity are not currently in the two areas, so this transaction alone may not cause an antitrust alert bell.
If the regulator yes A closer look at Google’s overall dominance and highlighting Wiz’s ability to work on different cloud platforms can help Google think it supports competition.
Google Cloud can’t catch up with AWS and Azure
The ultimate reason why Google has to adopt a multi-cloud model is simple: many customers just don’t, and don’t use Google Cloud. As of the fourth quarter of 2024, Statista Data shows that AWS has a 30% share of the global cloud market, while Azure ranks second at 21%. Google Cloud lags behind 12%.
Why is Google lagging behind? Some say this is because AWS started earlier in the field. Some say Microsoft’s enterprise strengths and strong ecosystem, including its OpenAi partnership, give it an edge. Google lacks these two advantages.
A few years ago, people wondered if Google would close the gap, as its cloud offerings were comparable to AWS and Azure.
“Google Cloud is ranked third in the cloud infrastructure market share, and has been a mystery,” former TC writer Ron Miller told TC. “They run the world’s largest cloud application, but it’s hard to turn it into a product for enterprise customers.”
He believes there has been a change under Google Cloud CEO Thomas Kurian. “He has a higher reputation for corporate clients,” Miller said. “They have been growing rapidly over the past few years and are still lagging behind Amazon and Microsoft in terms of revenue.”
On Tuesday’s investor call, Kurian stressed that Google is pursuing Wiz due to its multi-cloud capabilities, saying: “Multi-cloud is our commitment to multi-cloud, which means that new IT projects that organizations use with Google Cloud can be used with their existing IT investments and allow them to choose different products among future customers.
But Curian also believes that AI may change the game.
Kurian said AI architecture could lead to large enterprises pooling data from multiple places to central cloud providers. If this happens, multi-cloud protection may become less critical, but the security of centralizing data cache is.
Prior to this, MultiCloud was “helping customers identify, protect and defend against cyber threats in all major clouds and even on-premises systems.”
Now we will check whether regulators and end users buy.
