Text | Beca Sauce, Jaleel Jia Liu

Editor | Sleepy.txt

Cloud war, incredibly expensive. This is the largest acquisition in Google's history.

Last week, Google officially completed its acquisition of cloud security company Wiz for $32 billion. This breaks Google's 2012 acquisition record of $12.5 billion for Motorola Mobility and becomes the highest exit amount in the history of Israel's high-tech sector.

A Deal That Doesn’t Seem Worth It

From any traditional financial model perspective, this deal seems a bit outrageous.

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

In other words, the price-to-sales ratio (P/S) of this deal exceeds 45 times. In comparison, already publicly listed and mature security companies, like CrowdStrike and Palo Alto Networks, typically have P/S ratios of only 15 to 25 times. Google paid nearly a 100% premium for this.

Independent analyst Frank Wang calculated that even if Wiz grows to the same scale as CrowdStrike and Palo Alto Networks in the coming years, the combined revenue would only be between $10 billion and $12 billion.

From a purely financial return perspective, this seems like an extremely "losing" deal.

Why did Google make such a decision? To answer this question, we must first clarify what kind of journey Google has experienced in the cloud computing arena.

In the field of cloud computing, Google's role has always been somewhat nuanced. It has been one of the earliest pioneers and yet one of the latest to commercialize. For a long time, Google Cloud felt more like a technology laboratory than a real commercial product. But it was in this laboratory that Google created many technologies that later became industry standards.

The most typical example is Kubernetes. Internally, Google originally had a system for managing a massive number of server containers, codenamed Borg. It was later transformed into an open-source project, evolving into the Kubernetes (K8s) that dominates the cloud-native world today. This step nearly changed the entire technological landscape of the cloud computing industry—AWS and Azure ultimately had to fully support K8s.

Google did not make money the earliest in the cloud war, but it set many rules.

Before the wave of AI arrived, Google had already begun preparing for the next round of competition, developing chips specifically for machine learning computation: TPUs (Tensor Processing Units). Compared to general-purpose GPUs, TPUs offer higher energy efficiency in large-scale AI training. The training of AlphaGo and the inference of Gemini were run on this architecture. This gave Google Cloud a unique advantage in the AI computing field.

However, technological advantages do not automatically translate to market share. Google slowly realized that cloud services are not only about technology but also an art of sales.

The change happened after Thomas Kurian took office as CEO of Google Cloud. This executive, who had spent 22 years at Oracle, was brought in to expand the Google Cloud sales team rapidly, breaking down verticals such as finance, retail, healthcare, and manufacturing for independent operations. The previous "engineer culture dominance, with clients researching documents themselves" approach at Google began to be rewritten.

In 2023, Google Cloud finally achieved quarterly profitability for the first time.

At this juncture, a company entered their line of sight. This company is called Wiz.

One of the Fastest Growing Software Companies in History

Even in Silicon Valley, very few companies can grow as quickly as Wiz.

Founded just 18 months ago, its annual recurring revenue (ARR) exceeded $100 million. This speed is almost unprecedented in SaaS history—Slack took about three years, Shopify nearly five years, while Wiz took just a year and a half.

In the next few years, its growth jumped almost exponentially. The ARR quickly approached $500 million, nearing $1 billion. More importantly, the quality of its customers is outstanding, with nearly half of the Fortune 100 companies using Wiz’s products. BMW, Morgan Stanley, Salesforce, prominently included.

The four founders of Wiz, Assaf Rappaport, Ami Luttwak, Roy Reznik, and Yinon Costica, have a rather legendary background. They initially served in Israel's famous intelligence unit, the 8200 Unit, which is roughly equivalent to the U.S. NSA or UK's GCHQ elite unit; many founders of top global security companies like Check Point, Palo Alto Networks, and Armis came from this background.

But these four were not first-time entrepreneurs. In 2012, they founded the cloud security company Adallom, which was acquired by Microsoft for $320 million three years later. After the acquisition, Rappaport even served as head of Microsoft's Israel R&D center, managing thousands of engineers. However, they did not stay at Microsoft for long; in March 2020, they collectively left, taking part of their old team to start anew. This time, their goals were bigger.

In the summer of 2024, with the temperatures in Silicon Valley soaring and the AI startup wave at its most frantic stage, Wiz had just completed a $1 billion Series E funding round in May, with extremely ample cash reserves and no shortage of money. It was at this moment that Google extended an olive branch to Wiz.

In fact, as early as March, Google CEO Sundar Pichai had personally emailed Rappaport expressing acquisition intentions. But Rappaport hadn't seen it until May when they formally met at Google's headquarters.

Google subsequently offered $23 billion.

At that time in Silicon Valley, this was already an astronomical figure, enough to make the vast majority of startup founders achieve financial freedom on the spot. There was widespread belief that this was a done deal.

However, Wiz declined.

"I know the past week has been very tense, with constant rumors about a potential acquisition. Although we were surprised by the invitation we received, we choose to continue building Wiz," Wiz CEO Assaf Rappaport said in an email to all employees, adding that the next milestone for Wiz is $1 billion in annual revenue and an IPO.

He later recalled at the TechCrunch Disrupt conference, "That was probably the hardest decision of my life."

At the time, Wiz’s annual revenue was already approaching $1 billion, with no signs of slowing down. "The fastest growing software startup in history," is the shiniest label associated with Wiz and one of the titles most loved by the media.

Before being fully acquired by Google, Wiz was still in a typical high-growth, high-investment phase. As a company aiming for an IPO, it invested the vast majority of its revenue and funding (accumulated fundraising was about $1.9 billion) into R&D, global sales network expansion, and acquisitions of small companies like Gem Security. In Q2 2024, the overall market size was about $700 million, with Wiz's year-on-year growth rate reaching 94%. In comparison, Palo Alto Networks had an ARR of about $8 billion (growth rate of 20%), and CrowdStrike had an ARR of about $2.6 billion (growth rate of 49%).

Although Wiz is still small, its growth rate is clearly in a completely different league. The capital market generally believes that once listed, the company's valuation could easily exceed $50 billion.

Google did not go far; it has been closely watching Wiz's growth curve from the background. Wiz pushed its ARR from $350 million to $500 million in just six months and successfully locked in nearly half of the Fortune 100 companies as clients.

If they didn't act now, the next price would only be higher, or even may not be available at all.

Why Google Sees Wiz as Essential

Most acquisitions at the billion-dollar level typically use a mix of stock and cash. For instance, when Meta (then Facebook) acquired WhatsApp for $19 billion in 2014, cash was only $4 billion, with the rest in stock; Google's 2012 acquisition of Motorola also involved some cash.

Prior to the acquisition of Wiz, Google's cash flow was approximately $110 billion. This $32 billion transaction unusually used a cash-only model. Wiz took nearly 30% of Google's cash reserves.

Additionally, after acquisitions, large tech companies commonly apply strategies like "rebranding" and "organizational restructuring." However, Google granted Wiz a high degree of autonomy. Wiz does not need to change its name and can operate as independently as possible. This level of long-term preferential treatment has only been enjoyed by YouTube and early Android in Google's history. Google also promised that Wiz's approximately 1,800 employees would maintain an independent team structure, even having their own office.

It is often said that on the negotiating table, the one who is more anxious often grants more privileges.

To understand why Google was willing to spend $32 billion for Wiz, in addition to the previously mentioned "Wiz is one of the fastest growing software companies in history," we must also take a step back to consider the entire CNAPP (Cloud-Native Application Protection Platform) industry.

Before Wiz was acquired, the cloud security market was at a delicate turning point. The whole market can roughly be divided into three forces.

The first force comes from traditional security giants, which we can call the "old kings." The most typical examples are Palo Alto Networks and CrowdStrike. They rose during the traditional network security era, gradually building an extensive security platform through years of acquisitions—Palo Alto acquired companies like Twistlock and Bridgecrew, integrating various security tools into Prisma Cloud. This model resembles a large aircraft carrier, fully functioning with terminal security, network firewalls, cloud scanning, and vulnerability management. However, it has a significant drawback: it is too heavy. Deployment is complex, systems are large, and upgrades are slow. In the fast-changing environment of cloud computing, the "heavyweight architecture" appears somewhat cumbersome.

The second force represents a new generation of cloud security companies, exemplified by Wiz. Companies like Wiz and Orca Security belong to this category, with the core belief that cloud security shouldn't be as complex as traditional security. Before Wiz's emergence, most cloud security products required the installation of an "Agent," a small monitoring program on each virtual machine. If a company has tens of thousands of servers, it needs to install tens of thousands of Agents, and the deployment process often takes weeks or even months. Wiz did something very bold: it eliminated the Agent. This Agentless technology drastically shortened deployment from weeks to minutes.

The third force consists of the cloud providers themselves. AWS, Microsoft Azure, and Google Cloud all have their security tools. These products have a natural advantage: they come bundled with the cloud platform, so security features can often be easily activated when using cloud services. However, they have a structural weakness: they can only manage their own territory well, with very limited cross-cloud capabilities.

Given the multitude of choices in the market, why didn't Google acquire Wiz's competitors, such as Palo Alto Networks or CrowdStrike?

Scale is a significant reason. Palo Alto has maintained a market value of around $100 billion to $120 billion until around 2025, and after a wide-scale disruption in 2024, CrowdStrike quickly recovered to above $60 billion.

This scale is hard for Google to swallow.

Another key issue is "asset purity." Palo Alto Networks follows a platform integration path, holding a lot of firewall hardware and traditional network security business, and CrowdStrike's core battleground is endpoint security, which also comes with a considerable burden.

In contrast, every line of code in Wiz is designed for cloud environments and fits Google Cloud's needs perfectly. Google does not need to prune outdated hardware businesses and can directly inject Wiz's agentless scanning capabilities into GCP’s backend. This is what Google truly wants: a clean, native tool that can be seamlessly integrated into its strategic framework.

This means Google Cloud's services can be better marketed.

Nowadays, the decision-makers for cloud service purchases within enterprises are no longer the IT department but the chief information security officers in charge of security. This change has led to a shift in purchase paths and logic:

Initially, businesses would first select their cloud platform, then configure security tools. However, security has now become a prerequisite for choosing a cloud provider, thus enterprises first evaluate security and then select a cloud platform.

As a security partner for 50% of Fortune 100 companies, these chief information security officers are already familiar faces to Wiz, which will help Google expand its sales channels, creating a very short sales path. In such cloud procurement processes, which can easily amount to tens of millions of dollars with decision cycles measured in years, this path advantage is extremely valuable.

So from another perspective, what Google is really buying is not Wiz's current profits and market value but its vast enterprise customer base and the growth inertia of this fast-growing company. If Wiz continues to maintain an annual growth rate close to 100%, its revenue scale might approach $2 billion in two years—and if these customers migrate to Google Cloud's ecosystem with Wiz, the collaborative benefits will far exceed that.

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

At the same time, in today's era, the proliferation of AI is fundamentally changing the complexity of enterprise cloud environments. While there is much discussion in the market about how AI's development will impact the growth logic of traditional software and cloud services companies, Google's acquisition illustrates the answer: the expansion of AI has not weakened the value of cloud security; rather, it has sharply magnified its necessity.

With model training data stored in the cloud and AI agents in the cloud automatically invoking various APIs, the data flow between different clouds is increasing frequently, and the attack surface is enlarging exponentially. Previously, cloud environments were relatively static and clearly structured; however, now, due to AI, cloud environments have become extremely dynamic with blurred boundaries.

Therefore, products that can unify the management of all cloud security postures will transition from "optional" to "essential" in the coming years.

Wiz's product design naturally fits this multi-cloud and hybrid cloud complex environment. This $32 billion acquisition is essentially Google securing the best entry ticket before the incremental market matures.

After a series of regulatory lobbying battles, on March 11, 2026, the acquisition officially completed. Wiz's approximately 2,700 employees were integrated into the Google Cloud system. Index Ventures benefited around $3.8 billion, Sequoia Capital around $3.2 billion, Insight Partners around $2.9 billion, the total value of employee-held equity was about $3 billion, and Google additionally promised $1.5 billion in retention incentives.

"We Reward Risk"

In 2004, Google founders Larry Page and Sergey Brin wrote in their pre-IPO "Founder's IPO Letter": "Google is not a traditional company; we will not sacrifice long-term vision for short-term financial reporting." This sentiment has become Google's foundational operational logic for over twenty years.

As a continuation of that gene, Sundar Pichai, their successor, was asked in a 2023 interview: "How do you reconcile managing a giant organization like Google/Alphabet, with so many interests at stake that you must be responsible for, while maintaining that spirit of innovation and not becoming overly cautious?"

At the time, the context was that ChatGPT had just triggered an AI craze, and Google faced fierce criticism regarding its "slow response and risk aversion due to its giant corporation burden."

Pichai’s response then now seems to serve as the best annotation for this $32 billion acquisition three years later. He believes that the driving force for innovation comes from rewarding risk, even if the results aren’t immediately apparent: "I encourage others, I promote others because I know they've taken risks, made their best efforts, and made wise decisions."

Indeed, the challenges facing this deal are more complex and less quantifiable than the financial premiums.

The real challenges Google faces are more hidden and harder to quantify than the financial premiums. Those who have watched "Succession" might have an idea; large acquisitions often involve not just the transfer of assets but also a crisis of identity. In this case, this crisis has a very specific source: Wiz is an Israeli company.

In Israeli entrepreneurial culture, there is a word that is hard to translate: Chutzpah.

This word roughly means a combination of traits: boldness, directness, even a bit of arrogance, with little awe for authority and rules.

In many Israeli tech companies, junior engineers can directly interrupt the CEO to point out mistakes. Meetings may be intense and loud, but afterward everyone will still have coffee together as if nothing happened. This culture is very efficient during the startup phase.

However, when it encounters the organization system of large American tech companies, friction is almost inevitable. Larger companies emphasize consensus, processes, and emotional management more. When expressing differing opinions, politeness, restraint, and consideration of various feelings are often required. Therefore, these two cultures can easily misalign. Google employees may feel that the Israeli team is too direct, even aggressive; whereas Wiz engineers may find the discussion methods of large companies too circuitous and inefficient.

Historically, there have been countless cases where core teams left after being acquired by large companies, leading to products becoming gradually mediocre. Google has provided generous retention incentives, but money can keep people but may not retain the entrepreneurial spirit.

Besides cultural issues, there is another more subtle challenge: Wiz's neutrality.

Before being acquired, Wiz could serve enterprise customers from AWS, Azure, and Google Cloud simultaneously, primarily because of its independent identity.

It didn’t belong to any cloud vendor and had no position-based burdens, allowing enterprises to confidently let it scan the security state of their entire cloud environment. However, the moment Wiz put on Google's jersey, this relationship became delicate.

If you are a company with core business deployed on AWS, would you be willing to allow a Google-owned product to scan all your security vulnerabilities? Such concerns won’t explode overnight, but they will quietly seep into the most subtle management metrics: customer renewal rates, contract cycles, and speed of acquiring new customers.

Which is More Important, Wiz or $32 Billion Cash?

Before the acquisition occurred, there were rumors in the industry that, besides Google, Amazon had also expressed interest in acquiring Wiz. It too was turned down.

Some speculate that Microsoft, as Wiz's founding team's "old employer," may have seriously considered the possibility of bringing this team back under its wing.

In other words, Google wasn't the only one wanting this card. This is also what makes this deal particularly subtle.

On the surface, Google spent $32 billion to acquire a company with only $700 million in annual revenue. However, from another angle, Google is not really buying Wiz itself. What it is purchasing is a kind of ambiguous certainty.

$32 billion in cash is not deadly for a company like Google.

From a different perspective: had Wiz ultimately fallen into the hands of Microsoft or Amazon, the situation would be drastically different. A security platform with cross-cloud visibility, once in a competitor's hands, would mean that Google not only lost this trump card but also might face this trump card turned against itself.

So if you ask Google: which matters more, Wiz or $32 billion?

The answer may be: for Google, both are not that important. But ensuring that Wiz did not fall into Microsoft's or Amazon's hands is very important for Google.

This deal may not guarantee Google's absolute victory in the cloud war. But at the very least, it makes it hard for Google to lose.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。