There's a huge qualifier on Tuesday in the big news that Google is getting its security startup Wiz for a record $32 billion. Google says it will position Wiz as a provider of “Multicloud.” This means that Wiz is not a Google-only shop.
In reality, Google had no choice but to do this. A closer look at the reasons behind the decision also highlights Google's weaknesses over the coming months.
Customer retention
Wiz brings Google a large list of customers. As of today, the startup has already reached an annual return of $700 million. Before the news broke on Tuesday, it was on track to grow to $1 billion.
“Before the news breaks” is the surgical phrase here. Google and Wiz are surely hoping that this acquisition will create an interesting new funnel for customers and revenue, but first and foremost, both of which require that existing customers not shop for another security provider.
Many of these customers already use hybrid cloud deployments and are unable to use Google Cloud at all. One of the main reasons why some of them chose WIZ in the first place was their ability to support multiple cloud platforms.
If Google cuts off its capabilities, there is a risk of alienation for those users.
So Wiz CEO Assaf Rappaport and other senior leaders were calling customers in time to reach the contract.
Anti-Trust Regulations
When news broke that Alphabet/Google was considering acquiring Wiz last summer, speculation quickly continued about the regulatory challenges of driving such a large-scale deal. Google has been under antitrust scrutiny for many years, especially due to its advantages in areas such as search, mobile operating systems, and advertising.
Since then, the regulatory environment has changed. The United States under President Trump has yet to hear about major antitrust cases, so there are mixed opinions on how his administration will approach big technology. Some believe that large tech companies still face obstacles. Others think the big deal window is open again.
“It seems like the fact that Google feels like it can once again reflect on a big M&A,” one source said. “Do they think the Trump administration is on its side?”
Meanwhile, in smaller but influential markets like the UK, regulators have recently taken a more favorable stance towards big technology as part of a broader push that shows that “the UK is open to business.” The so-called hyperschools might consider this a little more opportunity to emerge from the shadows.
Even if the regulated climate remains challenging for Big Tech M&As, Google's “Multicloud” positioning could help. Cloud services and cybersecurity are not the two areas currently controlled by Google, so this transaction alone may not raise the anti-trust alarm bell.
If regulators are scrutinizing Google's overall advantage, emphasizing Wiz's ability to work on various cloud platforms could help claims that Google supports competition.
Google Cloud can't keep up with AWS and Azure
The last reason Google had to adopt the Multicloud model is simple. Many customers don't use and don't use Google Cloud. As of the fourth quarter of 2024, Statista data shows that AWS had a 30% share of the global cloud market, with Azure ranked second with 21%. Google Cloud is progressing significantly behind at 12%.
Why is Google so far? Some say it's because AWS got off to a faster start on the field. Some say that a strong ecosystem, including Microsoft's corporate domination and Openai partnership, gave it an advantage. Google doesn't have the advantage of both.
A few years ago, people thought that Google could potentially fill the gap, given that cloud delivery is comparable to AWS and Azure.
“Google Cloud has always been a bit of a mystery as to its third place in cloud infrastructure market share,” former TC writer Ron Miller tells TC. “They run the world's largest cloud applications, but they struggle to convert them into products aimed at corporate customers.”
He believes it has changed under Google Cloud CEO Thomas Kurian. “He's much more reliable with corporate customers,” says Miller. “They have grown rapidly over the past few years and have a fairly fulfilling business, but they still lag behind Amazon and Microsoft in terms of revenue.”
On Investor's call on Tuesday, Kurian highlighted Google's pursuit of Wiz for its Multicloud capabilities, saying, “Multi-cloud is what our customers want. The commitment to multicloud means that Google Cloud and new IT projects that organizations will be able to work with existing IT investments, allowing you to choose from a variety of vendors for future products.
But Kurian also believes that AI might change the game.
The AI architecture allows large companies to pool data from multiple locations to central cloud providers, Kurian said. If that happens, MulticoLoud protection may not be that important, but centralized data security will do.
Until then, MulticLoud “helps identify, protect and defend cyber threats in all major clouds and on-premises systems,” Kurian said.
Now we'll see if regulators and end users will buy it.