Security startup Wiz has reportedly turned down a $23bn takeover offer from Google.
The apparent scrapping of the deal comes weeks after Google’s plans to acquire CRM outfit HubSpot also allegedly crashed and burned.
At the time, Google was reported to have switched its attention and cash pile towards Wiz.
However, a memo that's claimed to be from Wiz CEO Assaf Rappaport was widely shared this week. It discussed “buzz about a potential acquisition” but said that it has chosen to “continue on our path to building Wiz”. Its “next milestones are $1bn in ARR and an IPO.”
Rappaport added that “saying no to such humbling offers is tough” but the team was confident in its choice.
Cloud security firm Wiz was founded in 2020. Its four founders had previously built up cybersec outfit Adallom, which they sold to Microsoft in 2015 for $320m. Last year Wiz was cited for being the fastest software company to grow from $1m to $100m in ARR.
So, Wiz is clearly on a trajectory, but the fact it decided to walk away also says something about Google.
Google is currently gaining attention from regulators, both in the US and further afield. A DoJ trial covering Google’s advertising practices is coming this autumn.
Meanwhile, the FTC is looking into Google – amongst others – as part of its investigation into Gen AI.
Likewise, the UK’s CMA is investigating Google’s AI investments and its position in the cloud market, as part of a broader investigation which also includes Microsoft Azure and AWS.
So, it might be fair to assume that a massive acquisition by Google would likely draw a lot of attention from regulators. Not least as Google already owns cybersec leader Mandiant, which it bought in 2022.
Regulatory attention is always a distraction for management of course. But more critically, it can hurt a tech firm’s ability to innovate and attract the best and brightest engineers.
Microsoft is the exemplar here. Following the resolution of its long-running anti-trust trial with the US DoJ in the noughties, Microsoft no longer faced the prospect of break up. However, it was also no longer the top destination for young engineers.
This was, the wisdom went, because they potentially felt hemmed in by restrictions imposed by its settlements with regulators. The fact that they probably didn’t stand to make the same amount of money on their stock options as previous cohorts might have also dulled Microsoft’s allure.
Instead, they flocked to a newer, cooler company called Google instead. But that was two decades ago.
