Google-Wiz Deal ‘Testmus Test’ for Trump Admin Handling of Big Tech

Seven months ago, Alphabet He lost a marquee case against the Department of Justice of the Biden Administration, which accused the company of maintaining an illegal monopoly in the search. Weeks before, the Wiz Google search for cybersecurity suppliers, in what would have been its biggest agreement, Fizado partly due to antitrust concerns.

With Donald Trump’s Return to the White House, Alphabet is back to the offensive.

Alphabet on Tuesday agreed Buy WIZ for $ 32 billion in cash, almost $ 10 billion more than the proposed price at mid -2024, and said it hopes that the agreement will be closed next year, subject to regulatory approval.

Wiz will sit in the Google cloud division, which is far from the company’s dominant search business. Google is late Amazon and Microsoft In the infrastructure of the cloud, a position that would make the regulatory case against a link a challenge for any administration.

The Federal Commission of Commerce under Lina Khan was notoriously thorn with respect to technological agreements, aggressively sinking the transactions so that frustrated Even notable Democratic supporters such as Reid Hoffman and Mark Cuban. Google’s Wiz search can be the first major test for the new FTC Andrew Ferguson president, since the technology industry measures how Trump 2.0 will treat the industry that houses the six largest US companies by market value.

“It will be a great fire test and a fast for mergers and acquisitions in 2025,” said Brad Haller, main partner of mergers and acquisitions of the West Monroe consulting firm. “This happens relatively early this year means that it can be used as a measurement stick.”

As a company supported by the company, the agreement would be a great unexpected gain for Silicon Valley’s risk capital companies, which have fought to generate yields from the market for the initial public offer Mainly off At the beginning of 2022 and the great and responses were inactive. After reaching a maximum point at $ 780 billion in 2021, the VC departure value collapsed to $ 89.2 billion the following year and $ 71.6 billion in 2023, according to a October report from Pitchbook and the National Venture Capital Association. In the third quarter of 2024, the number reached a minimum of five quarters.

“The great acquisition strategy is back in the menu for companies backed by VC,” said Haller.

Index Ventures is the largest external investor in WIZ, followed by companies that include capital, Insight Partners and Cyberstarts.

When moving away from an agreement with Google in July, the co -founder of Wiz, Assaf Rappaport, wrote in a memorandum to employees that the company would follow an opi. There are some signs that the OPI market is heating, as an artificial intelligence infrastructure company CoreweaveHealth Digital Startup Hinge health And buy now, pay the subsequent lender Clear All have recently presented prospects before the SEC.

Economic uncertainty represents the greatest wind against, since the imposition of President Trump of tariffs on the main commercial partners such as China, Mexico and Canada, as well as mass cuts in government spending, have led to extreme market volatility of the market and have generated concerns about business and consumers’ confidence. The Nasdaq is on its way to its fifth consecutive weekly fall and the worst quarterly performance since 2022.

For Google, the appeal of acquiring Wiz seems to be worth the potential regulatory risk. Reuters reportedCiting a source, which Wiz agreed a termination rate of more than $ 3.2 billion, which the publication called “one of the highest rates in the history of M&A.”

Google declined to comment.

Founded in 2020 Wiz Hit $ 100 million in annual recurring income After only 18 months. Company’s cloud security products include prevention, active detection and response, and have become increasingly essential, since rapid advances in AI have made the attacks more sophisticated and potentially more harmful.

“That price tells us that Google was almost desperate for increasing its good faith before the adoption of AI gathers even more speed,” wrote Gordon Haskett analysts in a note on Tuesday.

Google said in a statement On Tuesday, he announces the agreement that, “the greatest role of AI and the adoption of cloud services, have drastically changed the security panorama for customers, making cybersecurity increasingly important to defend against emerging risks and protect national security.”

In Wiz’s BlogRappaport said that “becoming part of Google Cloud is effectively attacking a rocket behind us.”

The agreement will face regulatory scrutiny, but “Google, in our opinion, would have a stronger case compared to consumer -centered acquisitions,” Bank of America analysts wrote in a note after the announcement. The firm said Google has less than 15% of the cloud service market.

Google’s greatest acquisition during the Biden presidency was its purchase of $ 5.4 billion Cybersecurity Company Principal. The search giant was not the only big technology company that felt the regulatory heat.

For Microsoft to finally close your Acquisition of $ 69 billion Of the video game editor Activision Blizzard at the end of 2023, the company had to endure a battle of 21 months with the regulators, including an effort by court order of the FTC. The agency too defendant To block Goal Acquisition of the Virtual Reality Company inside, although a district court in California overflowing FTC efforts.

Beyond the challenges of traffickers, goal, AppleAmazon and Microsoft have been accused of monopolistic practices by the Department of Justice or the FTC. In the case of Google, both agencies followed actions.

Khan told “Squawk Box” of CNBC in January that he expected Trump’s incoming administration not to let Amazon and the target of the hook of the pending antimonopoly costumes with a “love agreement.” His comments occurred after numerous executives and technology companies, including GoogleHe promised money to the Trump opening fund.

Ferguson has suggested that his FTC will keep technology a good eye, although he has not offered much through details. During Trump’s first administration, the president had a particularly hostile relationship with the industry, routinely touched Founder of Amazon Jeff Bezosespecially for his property of the Washington Post, in addition to aiming Meta and Google for his alleged prejudices towards its administration.

Those previous enemies have made additional efforts to change the tone this time, if that means end Diversity, Equity and Inclusion or Trekking programs to Washington for the inauguration of Trump later previously Making visits to his Mar-A-Lago resort in Florida.

In an interview in “Squawk Box” last week, Ferguson said “Big Tech is one of the main priorities” of the administration.

“President Trump appointed me to protect Americans in the market,” Ferguson said. “And I said from the first day, Big Tech is one of our main priorities, and that is still true.”

Jonathan Kanter, former attached attorney general of the antimonopoly division of the Department of Justice under Biden, saying In CNBC’s “Power Lunch” on Tuesday that a considerable regulatory review is likely to be on the way to the Google-Wiz agreement. He said that it is not just the Google position in the cloud, but also because of the amount of data that the company controls.

“I don’t think Wiz’s agreement will relieve the path to rapid approval,” said Kanter, who is now a CNBC taxpayer. “It will be a long path. They will have to look at many documents, many data and understand if Google’s market power will really strengthen in many different markets.”

– Jordan Novet and Samantha subin of CNBC contributed to this report.

LOOK: CNBC’s full interview with FTC president Andrew Ferguson