Google's Biggest Acquisition in History, Why Wiz?

Title: Google’s Largest Acquisition Ever—What Makes Wiz Worth It?

Author: Dongcha Beating

Source:

Repost: Mars Finance

Cloud warfare is incredibly expensive. This is Google’s biggest acquisition to date.

Last week, Google officially completed its acquisition of cloud security company Wiz for $32 billion. It broke Google’s 2012 record of acquiring Motorola Mobility for $12.5 billion and also became the highest-value exit in Israel’s high-tech history.

A Deal That Doesn’t Seem Cost-Effective

From any traditional financial model, this deal appears somewhat irrational.

Wiz was founded in 2020. Initially, it was just an ordinary cybersecurity startup, but within a year, it pivoted to focus on providing cloud security platforms for large enterprises. At the time of acquisition, its annual revenue was about $700 million. Yet Google paid $32 billion for it.

In other words, the price-to-sales ratio (P/S) for this deal exceeds 45 times. For comparison, established and mature security companies like CrowdStrike and Palo Alto Networks typically have P/S ratios between 15 and 25. Google paid nearly double the valuation.

Independent analyst Frank Wang calculated that even if Wiz grows to match the size of CrowdStrike or Palo Alto Networks in the next few years, its combined revenue would only be around $10 to $12 billion.

Purely from a financial return perspective, this looks like an extremely “loss-making” deal.

Why did Google make this decision? To answer that, we need to understand the journey Google has taken in the cloud computing arena.

In cloud computing, Google’s role has always been somewhat nuanced. It was one of the earliest pioneers but also one of the latest to commercialize. For a long time, Google Cloud was more like a tech lab than a real business product. But within this lab, Google developed many technologies that later became industry standards.

The most notable example is Kubernetes. Google originally had a system called Borg to manage massive server containers. It was later open-sourced and evolved into Kubernetes (K8s), which now dominates the cloud-native world. This shift nearly transformed the entire cloud computing industry—AWS and Azure eventually had to fully support Kubernetes.

Google didn’t make the earliest profits in the cloud war, but it set many of the rules.

Before the AI boom, Google had already started preparing for the next wave by developing specialized chips for machine learning: TPU (Tensor Processing Units). Compared to general-purpose GPUs, TPUs offer higher efficiency for large-scale AI training. Many projects, including AlphaGo’s training and later Gemini’s inference, ran on this architecture. This gave Google Cloud a unique advantage in AI computing.

However, technological superiority doesn’t automatically translate into market share. Google gradually realized that cloud services are not just about technology—they are also about sales.

This shift happened after Thomas Kurian took over as CEO of Google Cloud. A veteran from Oracle with 22 years of experience, Kurian was brought in to expand sales rapidly. He split the sales team into verticals—finance, retail, healthcare, manufacturing—and focused on building dedicated teams. The previous “engineer-led, customer self-research” approach was gradually replaced.

In 2023, Google Cloud finally achieved its first quarterly profit.

At this point, a company entered their sights: Wiz.

One of the fastest-growing software companies in history

Even in Silicon Valley, few companies grow as fast as Wiz.

Within 18 months of founding, Wiz’s annual recurring revenue (ARR) surpassed $100 million. This speed is almost unprecedented in SaaS history—Slack took about three years, Shopify nearly five, but Wiz achieved it in just a year and a half.

In the following years, its growth was nearly exponential. ARR quickly surged to $500 million, approaching $1 billion. More importantly, its customer quality was outstanding—nearly half of the Fortune 100 companies used Wiz’s products, including BMW, Morgan Stanley, and Salesforce.

Wiz’s four founders—Assaf Rappaport, Ami Luttwak, Roy Reznik, and Yinon Costica—have a legendary background. They initially served in Israel’s renowned intelligence unit 8200, comparable to the US NSA or UK GCHQ. Many top security company founders, such as Check Point, Palo Alto Networks, and Armis, also come from this unit.

But this wasn’t their first startup. In 2012, they founded cloud security company Adallom, which was acquired by Microsoft for $320 million after three years. After the acquisition, Rappaport even became head of Microsoft’s Israel R&D center, managing thousands of engineers. But they didn’t stay long at Microsoft—by March 2020, they all resigned, taking some of their original team with them to start anew. This time, with bigger ambitions.

In summer 2024, Silicon Valley was in the midst of a scorching heatwave, and the AI startup frenzy was at its peak. Wiz had just secured a $1 billion Series E funding round in May, with ample cash reserves. At this moment, Google extended an olive branch.

Actually, as early as March, Google CEO Sundar Pichai personally emailed Rappaport to express interest in acquiring Wiz. But Rappaport didn’t see it until they met at Google’s headquarters in May.

Google then offered $23 billion.

Back then, in Silicon Valley, this was an astronomical figure—enough to make most startup founders instantly financially free. Many believed this was a done deal.

But Wiz declined.

“I know the past week has been very tense, with constant rumors about a potential acquisition. While we are honored by the offer, we chose to continue building Wiz,” Wiz CEO Assaf Rappaport wrote in an email to all employees. He said Wiz’s next milestones were $1 billion in annualized revenue and an IPO.

He later recalled at TechCrunch Disrupt: “That was probably the hardest decision of my life.”

At that time, Wiz’s annualized revenue was approaching $1 billion, with growth showing no signs of slowing. “The fastest-growing software startup in history”—this was Wiz’s most prominent label and one frequently cited by the media.

Before Google’s full acquisition, Wiz was still in a high-growth, high-investment phase. As a company aiming for an IPO, it invested most of its revenue and funding (totaling about $1.9 billion) into R&D, expanding its global sales network, and acquiring smaller companies like Gem Security. In Q2 2024, the overall market size was about $700 million, with Wiz’s YoY growth reaching 94%. Compared to competitors—Palo Alto Networks with about $8 billion ARR (20% growth) and CrowdStrike with about $2.6 billion ARR (49% growth)—Wiz was much smaller but growing much faster. Market analysts believed that once Wiz went public, its valuation could easily surpass $50 billion.

Google kept a close eye on Wiz’s rapid growth. In just six months, Wiz increased its ARR from $350 million to $500 million, securing nearly half of the Fortune 100 enterprise clients.

If Google didn’t act now, the next valuation could be even higher—or impossible to acquire.

Why Google Must Have Wiz

Most billion-dollar acquisitions are done with a mix of stock and cash. For example, in 2014, Facebook (then Facebook) bought WhatsApp for $19 billion, with only $4 billion in cash and the rest in stock; Google’s 2012 acquisition of Motorola was partly cash.

Before acquiring Wiz, Google’s cash reserves were around $110 billion. The $32 billion deal was unusually all-cash, taking nearly 30% of Google’s cash holdings.

Additionally, big tech acquisitions often involve “brand removal” and “organizational restructuring.” But Google granted Wiz significant autonomy. Wiz didn’t need to rebrand and could operate independently. Historically, only YouTube and early Android enjoyed such long-term independence from Google. Google promised that Wiz’s approximately 1,800 employees would maintain their team structure and even have their own offices.

In negotiations, the more urgent a party is, the more privileges it tends to receive.

To understand why Google was willing to pay $32 billion for Wiz, besides the reasons mentioned—“Wiz is one of the fastest-growing software companies in history”—we also need to look at the entire CNAPP (Cloud-Native Application Protection Platform) industry.

Before the acquisition, the cloud security market was at a delicate inflection point. It could be divided into three main forces.

The first force comes from traditional security giants, called the “Old Kings.” The most prominent are Palo Alto Networks and CrowdStrike. They rose during the traditional network security era, building large security platforms through acquisitions—Palo Alto, for example, acquired Twistlock and Bridgecrew, integrating security tools into Prisma Cloud. This model resembles a massive aircraft carrier—comprehensive but heavy, complex to deploy, slow to upgrade. In the fast-changing cloud environment, such “heavyweight architectures” are somewhat clumsy.

The second force is represented by new-generation cloud security companies like Wiz and Orca Security. Their core philosophy is: cloud security shouldn’t be as complex as traditional security. Before Wiz, most cloud security products required installing “agents”—small monitoring programs—on each virtual machine. For thousands of servers, that meant thousands of agents, taking weeks or months to deploy. Wiz did something bold: eliminated agents altogether. This agentless approach drastically improved deployment—reducing it from weeks to minutes.

The third force is the cloud providers themselves. AWS, Azure, and Google Cloud all have their own security tools. These products have a natural advantage: they are built into the cloud platform, so customers tend to use them. But they also have a structural weakness—they can only secure their own environment, with limited cross-cloud capabilities.

Given the many options, why didn’t Google acquire competitors like Palo Alto or CrowdStrike?

Size is a major factor. Palo Alto’s market cap is expected to stay between $100 billion and $120 billion until around 2025, and CrowdStrike, after a major outage in 2024, rebounded to over $60 billion.

Such size is difficult for Google to absorb.

Another key issue is “asset purity.” Palo Alto is focused on platform integration, with significant hardware and traditional network security businesses. CrowdStrike’s core is endpoint security, with a substantial legacy burden.

In contrast, Wiz’s code is entirely cloud-native, perfectly aligned with Google Cloud’s needs. Google doesn’t need to trim outdated hardware businesses; it can directly embed Wiz’s agentless scanning capabilities into GCP’s core infrastructure. This is what Google truly wants: a clean, native tool that can be integrated into its strategic framework.

This means Google Cloud services can be sold more effectively.

Today, enterprise cloud purchasing decisions are no longer made solely by IT departments but increasingly by Chief Information Security Officers (CISOs). Security has become a prerequisite for cloud adoption, not just an afterthought. Companies now evaluate security first, then choose cloud providers.

As security partners for 50% of Fortune 100 companies, CISOs are familiar with Wiz, which helps Google expand its sales channels—creating a very short sales cycle. In enterprise cloud deals worth tens of millions of dollars, this advantage is invaluable.

From another perspective, Google isn’t just buying Wiz’s current profits and valuation; it’s acquiring its vast enterprise customer base and the growth momentum of this rapidly expanding company. If Wiz maintains nearly 100% annual growth, its revenue could approach $2 billion in two years—and migrating these clients to Google Cloud would generate even greater synergies.

By then, looking back, $32 billion might not seem so expensive.

At the same time, AI’s proliferation is fundamentally changing the complexity of enterprise cloud environments. While some argue that AI development will disrupt traditional software and cloud companies’ growth models, Google’s actions tell a different story: AI expansion is actually amplifying the importance of cloud security.

Training data stored in the cloud, AI agents calling APIs, and data flows between clouds are increasing exponentially, expanding attack surfaces. Previously, cloud environments were relatively static and well-structured; now, with AI, they are highly dynamic and borderless.

Therefore, products that can unify and manage all cloud security postures will shift from “optional” to “essential” in the coming years.

Wiz’s product design is inherently suited for multi-cloud and hybrid environments. This $32 billion acquisition is essentially Google securing the best entry point before the market matures further.

After a series of regulatory lobbying and negotiations, the deal was finalized on March 11, 2026. Wiz’s approximately 2,700 employees joined Google Cloud. Index Ventures earned about $3.8 billion, Sequoia Capital around $3.2 billion, Insight Partners about $2.9 billion, with employee equity valued at roughly $3 billion. Google also committed $1.5 billion in retention incentives.

“We reward risk”

In 2004, Google founders Larry Page and Sergey Brin wrote in their IPO letter: “Google is not a traditional company; we won’t sacrifice our long-term vision for short-term financial results.”

Following this ethos, their successor Sundar Pichai, when asked in a 2023 interview how he balances the responsibilities of a giant like Google/Alphabet while maintaining innovation without becoming overly cautious, responded:

At that time, ChatGPT had just sparked an AI frenzy, and Google faced widespread criticism for being slow to respond and burdened by its size.

Pichai’s answer, three years later, seems to perfectly encapsulate the rationale behind this $32 billion deal. He believes that the driving force of innovation comes from rewarding risk—even if results are not immediate: “I encourage and promote others because I know they are taking risks, doing their best, and making wise decisions.”

Indeed, the challenges of this deal are more complex and less quantifiable than the premium paid.

Google’s real challenge is more subtle and harder to measure than just financial valuation. Watching the series “Succession,” one might feel that large acquisitions are not just asset transfers but also crises of identity. This time, the crisis has a very specific origin: Wiz is an Israeli company.

In Israeli startup culture, there’s a difficult-to-translate word: Chutzpah.

It roughly means a blend of boldness, directness, and even arrogance—little respect for authority and rules.

In many Israeli tech companies, junior engineers can directly interrupt the CEO to point out mistakes. Meetings are often heated, loud, but after arguing, everyone still drinks coffee together as if nothing happened. This culture is highly efficient during startup phases.

But when it encounters the organizational structure of a large American tech company, friction is almost inevitable. Big companies emphasize consensus, process, and emotional management. Expressing dissent often requires tact and restraint. As a result, cultural clashes can occur. Google employees might find Israeli teams too direct or even aggressive; Wiz engineers might see corporate discussions as overly circuitous and inefficient.

History shows many cases where core teams leave after acquisitions, and products become mediocre. Google offers generous retention incentives, but money alone can’t preserve the entrepreneurial spirit.

Beyond cultural issues, there’s another subtler challenge: Wiz’s neutrality.

Before the acquisition, Wiz could serve clients across AWS, Azure, and Google Cloud because of its independence. It had no allegiance to any cloud provider, allowing enterprises to trust it to scan their entire cloud environment. But once Wiz becomes part of Google, this relationship becomes delicate.

If a company primarily operates on AWS, would they be willing to let a Google-owned product scan their security vulnerabilities? Such concerns won’t surface overnight but can subtly influence metrics like renewal rates, contract cycles, and new customer acquisition.

Wiz and $32 billion in cash—what’s more important?

Before the deal, industry rumors suggested that Amazon was also interested in acquiring Wiz. But that was also rejected.

Some speculate that Microsoft, as Wiz’s “old owner,” might have seriously considered reabsorbing the team internally.

In other words, Google isn’t the only player interested in this asset. This makes the deal even more nuanced.

On the surface, Google paid $32 billion for a company with only $700 million in annual revenue. But from another perspective, Google isn’t just buying Wiz; it’s buying a form of uncertain certainty.

$32 billion in cash isn’t a fatal blow for Google.

Think differently: if Wiz ends up in Microsoft’s or Amazon’s hands, the situation would be entirely different. A security platform with cross-cloud visibility in the hands of a competitor would not only mean losing a strategic asset but also facing the risk of that asset turning against Google.

So, if you ask Google: which is more important—Wiz or $32 billion?

The answer might be: neither is truly more important. But preventing Wiz from falling into Microsoft’s or Amazon’s hands is crucial for Google.

This deal may not guarantee Google’s absolute victory in the cloud war, but it makes losing it very difficult.