Cloud security startup Wiz has reportedly walked away from talks to be acquired by Google parent Alphabet for $23 billion – a deal which would have been the search giant’s largest acquisition to date.
Wiz CEO Assaf Rappaport told employees the company will instead pursue an initial public offering, which he previously said last year.
“Saying no to such humbling offers is tough,” Rappaport wrote in a memo to employees obtained by CNBC.
The successful startup reportedly weighed antitrust and investor concerns as reasons for abandoning the deal-in-progress, an anonymous source told CNBC, as the Department of Justice has hit Google with two antitrust lawsuits.
The deal would have nearly doubled the startup’s $12 billion valuation – a valuation that skyrocketed soon after Rappaport and a handful of colleagues founded Wiz in 2020.
The security startup hit $100 million in annual recurring revenue after 18 months, and reached $350 million in 2023, according to The Wall Street Journal.
Wiz has welcomed investments from big venture backers, including Index Ventures, Insight Partners, Lightspeed Venture Partners and Sequoia, according to CNBC.
The acquisition would have helped Alphabet boost its cloud security products as the company aims to better compete with rival Microsoft.
Alphabet’s cloud unit reached profitability in 2023 after years of financial investments, according to CNBC.
The company’s cloud computing services – called Google Cloud – have grown in recent years as companies race to keep up with the AI boom.
Meanwhile, Wiz saw rapid growth since the cloud software company launched just before the pandemic – when demand for cloud security spiked as companies pivoted to widespread remote work.
The startup raked in funding – announcing a $100 million funding round less than a year after its creation, according to CNBC.
The Wiz founders’ previous startup, security company Adallom, was backed by Sequoia and Index before being acquired by Microsoft for $320 million in 2015.
Alphabet has been a conservative acquirer ahead of the reportedly failed Wiz deal.
Its largest acquisition was its $12.5 billion deal with Motorola Mobility in 2012. Its second-largest acquisition was security company Mandiant for $5.4 billion two years ago.
The company acquired Fitbit for $2.1 billion in 2021, as well as completing YouTube, DoubleClick, Looker and Waze deals over the years.
Google is currently awaiting a verdict in a Justice Department antitrust lawsuit that alleges the company maintained an illegal monopoly over the search market.
The DOJ last year filed a second antitrust lawsuit which has yet to go to trial, that alleges Google monopolized digital ad technologies.
