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Google's parent company Alphabet plans to acquire a cybersecurity unicorn for $23 billion.

On July 14, local time, according to foreign media reports, Google's parent company Alphabet (Nasdaq: GOOGL) has started negotiations to acquire the cybersecurity startup Wiz. The total amount of the transaction may be as high as 23 billion US dollars, which is expected to be Google's largest acquisition to date. According to people familiar with the matter, the deal may be reached soon, but there are still many details that have not been resolved and the negotiations may fail.

Public information shows that Wiz, an Israeli cloud security company, was founded in 2020 by former members of Microsoft's cloud security team. It is headquartered in New York and has more than 900 employees in the United States, Europe, and Asia. Wiz is committed to cloud-native security, helping enterprises protect their cloud infrastructure on a large scale. It provides the first cloud visibility solution for enterprise security and has cooperated with multiple cloud service providers such as Microsoft and Amazon.

According to Wiz, the company generated about $350 million in revenue in 2023. In May of this year, Wiz was valued at $12 billion in its latest round of financing, with investors including Andreessen Horowitz, Lightspeed Venture Partners, and Thrive Capital. There were reports that Wiz planned to acquire smaller cybersecurity startups and eventually go public, but in the face of Google's acquisition agreement, Wiz may have changed its plans.

Analysts pointed out that Google has been increasing its investment in cloud business, including providing customers with more powerful AI (artificial intelligence) tools, and the acquisition of Wiz may help Google catch up with its competitors in the increasingly competitive cloud computing market. As more and more AI-related startups move their applications and data to the cloud, opportunities in this field are also growing.

Although Google still lags behind Microsoft and Amazon in this field, the company's first-quarter financial report for the period ending March 31, released in April this year, showed that cloud business revenue increased from US$7.454 billion in the same period last year to US$9.574 billion, a year-on-year increase of more than 28%, returning to the growth rate of the first two quarters of 2023.

In recent years, Google has been relatively conservative in its acquisitions, with only a few large acquisitions. In 2022, Google spent $5.4 billion to acquire cybersecurity company Mandiant. In 2012, it acquired Motorola Mobility Holdings Ltd. for $12.5 billion.

However, just last week, there was news that Google shelved its acquisition of online marketing software company HubSpot, perhaps considering that the company is facing strict scrutiny from European and American antitrust agencies. Therefore, the acquisition of Wiz may also be affected by similar concerns.

In January last year, the U.S. Department of Justice filed an antitrust lawsuit against Google for its alleged monopoly of digital advertising technology. In January this year, the U.S. Federal Trade Commission (FTC) issued an investigation order to five companies, including Google's parent company Alphabet, requiring them to provide information on recent investments and partnerships in generative AI companies and major cloud service providers. In March this year, the European Union announced an investigation into Alphabet, Apple and Meta. This was the first time that the EU used the antitrust law "Digital Markets Act" (DMA), which officially came into effect on March 7 this year.