Google will need to find a new cloud security champion as Wiz backs out of $23 billion acquisition

Cloud security specialists Wiz has walked away from a deal worth $23 billion, as it opts to remain independent and pursue an IPO instead.

In an internal memo seen by CNBC , Assaf Rappaport, CEO at Wiz, said "saying no to such humbling offers is tough," adding that the firm would be focussing on going public and meeting its $1 billion annual recurring revenue target.

An individual familiar with the deal told CNBC that Wiz's decision to back out of the deal was driven by antitrust and investor concerns.

If completed, the deal would have been Google's largest-ever acquisition and promised to "jump start" Google's ambitions in the cloud security sector over the next decade, amid stiff competition from Microsoft and Amazon .

Speaking to ITPro , Neil MacDonald, VP and Distinguished Analyst at Gartner, suggested the significant offer from Google reflected the search giant's intent on capturing a growing demand for cloud security services.

"We believe Google had a broad vision for the Wiz technology. A modern digital business has a huge surface area for attacks – mobile workers using managed and unmanaged devices, exposed APIs, applications that have moved to public cloud , edge computing locations, and SaaS applications. Data is spread across all of these.  AI and specifically GenAI adds a composite exposure of data, application, and usage risks."

MacDonald continued, explaining how Wiz's core graph analytics solution offers significant value to businesses looking to get a handle on the increasingly sprawling list of assets that makes up their IT estate.

"The core Wiz technology of graph analytics powers an underlying continuous risk engine that helps CIOs and CISOs identify, prioritize and remediate where they are exposed across their digital estate. This is a hugely complex problem and a significant market opportunity for security vendors to tackle – including Google, Microsoft, Palo Alto Networks, CrowdStrike and Wiz."

Google could look elsewhere to bolster cloud portfolio

Cloud security is expected to be a growing sector in light of a growing number of cyber attacks targeting businesses cloud infrastructure. Research from CrowdStrike concluded that the cloud space is becoming "a major battleground for cyber attacks".

As a result, analysts told ITPro it made sense that Google was looking to expand its cloud security portfolio. It has already made some strides in this sphere in recent years, acquiring Israeli cloud security startup Siemplify in 2022 for $500 million.

MacDonald outlined potential steps the search giant could take in light of Wiz's decision to walk away, highlighting a number of other security vendors that could fast-track Google's cloud security ambitions.

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"There are other vendors that would accelerate Google's multicloud capabilities in the cloud security market. For example, Orca and Sysdig along with vendors in adjacent markets such as Check Point Software, Rapid7, and Tenable," he suggested.

Google can also look inwards, according to MacDonald, and look to bolster its cloud security capabilities in-house, as it has done with its Security Command Center Enterprise service, which it enhanced earlier this year.

"Another option for Google is the strategy it was originally pursuing to develop this in-house. Google already has developed some multicloud security capabilities and released them earlier this year under the name of Security Command Center Enterprise.