Purchasing Wiz, a company that develops cybersecurity software for cloud computing, would be Google's largest acquisition to date and would signify the company's significant bet on cybersecurity.
According to the source, Google and Wiz started talking after the business received $1 billion in funding from venture capitalists earlier this year.
The insider claims that discussions could yet end in failure because the terms of a possible agreement have not been established.
The Wall Street Journal was the first to report on the Google-Wiz negotiations.
The acquisition would likely top Google's $12.5 billion acquisition of Motorola almost ten years ago, which was the largest buyout in business history. Just two years later, Google sold Motorola for a huge loss.
Wiz's $23 billion price tag is almost twice as much as the startup's $12 billion valuation from its most recent investment round.
For $5.4 billion, Alphabet acquired cybersecurity company Mandiant in March 2022 in an effort to support businesses in addressing cyber risks and grow its cloud computing division.
A key component of the company's attempts to diversify its revenue streams outside of search advertising is Google Cloud. Despite an increase in cloud revenues, it has found it difficult to compete with Amazon and Microsoft's comparable offerings.
Dan Ives, managing director and senior equity research analyst at Wedbush, wrote in a note to clients on Monday that Google is placing a "major bet on the cyber security space to complement its flagship offering in the cloud" and that purchasing Wiz would be a "shot across the bow" at Microsoft and Amazon.
Because businesses have been investing a lot of money to shift data to cloud platforms, cloud security has taken on more importance in recent years. Only last week, AT&T reported that a large breach resulting from a “illegal download” on a third-party cloud platform had exposed the call and text information of almost all of its wireless customers.
The Biden administration's aggressive antitrust monitoring of tech firms has coincided with the negotiations for the Google-Wiz transaction.
But according to Ives, if Trump were to retake the White House, antitrust enforcement may be lessened significantly, leaving the Federal Trade Commission "way weaker" and causing a "accelerated merger and acquisition climate to take place for Big Tech."
The acquisition would represent a significant departure for Wiz and its founders, Roy Reznik, Assaf Rappaport, Ami Luttwak, and Yinon Costica, if it is completed and closed. The four executives first got together when they were enlisted into the Israel Defense Forces' cyber intelligence unit, Unit 8200.
Established in March 2020 amidst the Covid-19 pandemic, Wiz, situated in New York City, has experienced remarkable expansion. According to the corporation, 40% of Fortune 100 businesses are its current clientele.
Notable clients include Slack, Salesforce, and BMW. It also collaborates with major cloud providers including Amazon, Microsoft, and Google.