the negative consequences of Google’s$ 32 billion merger of Wiz

” And then I turn the floor over to Assaf Rappaport,” he said.

Never has a local investor had the opportunity to speak on a conference call with Google CEO Sundar Pichai times after signing a$ 32 billion test in cash. Israel is a fierce exit force. In a extraordinary move in the Israeli economy, Google made the acquisition of Wiz on Tuesday, surpassing Google’s previous acquisition of Waze in 2013, nearly 30 times Google’s original$ 10 a decade ago, and 100 days what Assaf Rappaport and his team received from Microsoft for Adallom, the primary security firm they founded after serving in the IDF, for the first time.

Additionally, this is the largest merger of a venture capital firm, surpassing WhatsApp’s$ 19 billion order in 2014 by Facebook.

Assaf Rappaport, the company’s CEO, Yinon Costica, the vice president of goods, Ami Luttwak, vice president of technology, and Roy Reznik, the vice president of development, founded Wiz only five years ago. Because Wiz was founded during the COVID-19 epidemic and has always attracted investors with its relatively youthful founders, they still own a sizable portion of the equity. They each now own less than 10 % of Wiz, and each of them is anticipated to leave with about$ 3 billion before taxes. Although the founders of Wiz are Jewish, their corporate registration and intellectual property are not based there.

As a bonus to the company’s stock they own, which will be converted into Google shares, will be given to Wiz’s 1, 800 employees, in addition to the company stock they currently hold, for a total of$ 1.5 billion in cash, if the astronomical deal size wasn’t enough. About half of Wiz’s workforce, which are primarily long-term employees, is based in Israel, and many of its employees are anticipated to earn millions of dollars each. This will cause a strange wave of money to enter the native habitat. The immediate consequences may be seen in increased spending on luxury vehicles like real estate and restaurants, but the long-term effects are more significant: highly trained people who no longer have to work for economic factors are more likely to take risks and start new businesses. In five to seven years, it will be interesting to see how many original Wiz workers have founded their own businesses, helping Israel’s high-tech industry, which continues to thrive despite government measures that some consider to be hostile to the market.

Wiz has always been a jerk in every way. One of the fastest-growing software companies in history, it managed to reach a$ 100 million annual revenue run rate in just 18 months. By the beginning of the summer, when negotiations with Google began, its revenue run charge had increased to$ 500 million, and by the end of 2025, it is anticipated to have surpassed$ 1 billion. Its assessment has increased as a result: Wiz became a unicorn in record time, earning a$ 1.7 billion valuation only one year after its establishment. By the time it raised its last round of funding in 2024, its valuation had reached$ 12 billion. Google is currently acquiring it for nearly three times that number.

What makes Wiz worthwhile$ 32 billion in cash to Google, then? It’s not just what Wiz has, but it’s also what Google lacks, more important. Google’s cloud business ( GCP ) has grown rapidly, increasing from$ 9 billion in 2019 to$ 43 billion in 2024, but it has failed to surpass Microsoft, which entered the cloud market at the same time. Google currently leads Microsoft in terms of market share, trailing only Microsoft by 20 % and Amazon by roughly 33 %. Microsoft’s dominance in the cloud is not just a result of its extensive presence in enterprise computing, but also from its huge cybersecurity business, which generates billions of dollars annually. This industry was bolstered by the acquisition of Adallom, Rappaport’s previous business.

Google intends to incorporate Wiz’s CNAPP ( Cloud-Native Application Protection Platform ) solutions into every cloud deal it signs. The convenience of Wiz’s security platform, which safeguards all assets linked to the commercial cloud and prevents cyberattacks, is its main selling point. As well as a number of governments and startups, now, half of the Fortune 100 companies rely on Wiz’s fog security solutions. The first and largest of its kind, Wiz is a real cloud-native business.

While Palo Alto Networks and other companies have strong positions in fog protection, some people have compared their methods to “putting a DVD in the fog and calling it Netflix.”

The goal of the consolidation is not just revenue; it’s also about enhancing Google’s user experience on the sky. Pichai, Google CFO Anat Ashkenazi, and Thomas Kurian, who leads Google Cloud, were also present during today’s event call. Kurian spearheaded the deal, keeping tabs on Wiz even after the business rejected its first$ 23 billion offer last year. Despite fluctuating negotiations, Google’s resolve indicated a corporate commitment to integrating Wiz into its cloud business, and the$ 10 billion figure itself did not.

Of course, the current political environment also played a part. Donald Trump’s win and Lina Khan’s departure as FTC chair helped to set the course for the acquisition’s governmental framework. But, sources close to the bargain speculate that Wiz, which wished to avoid regulation purgatory, was more concerned about this than Google. The acquisition is still a legal battle, and Google has stated that it does not anticipate the offer to close before 2026, which is an unusually long time frame. In the interim, Wiz will continue to operate as an impartial business and carry out its current programs, including constructing a new office building in Tel Aviv’s Sarona area.

Google’s justification is obvious, but the question remains: What caused Wiz’s authority to alter course? A$ 33 billion offer and a$ 32 billion offer differ significantly, but this is not the only thing that’s changed. Rappaport had bold statements about Wiz’s desire to launch an IPO and its goal to become a$ 100 billion business just months prior.

More complicated explanations are needed. Wiz started to appear to be getting ready for an IPO in recent months, and it even hired a CFO for the first time. Was it the CFO, however, who realized that Wiz was also unsustainable despite a move level of$ 500 million? The business probably had to choose between halting its growth to reach profitability and accepting a lower IPO valuation. Going public may not have been the best course of action given the current IPO market, which has become even more ambiguous as a result of Trump’s plan changes.

Despite its success, Wiz has always had the primary problem of remaining essentially a one-product business. Wiz has started following this pattern with mergers, such as its latest$ 450 million buy of Dazz, as the market is shifting toward broader security systems. However, this was not the revolutionary agreement that would have placed Wiz in the same position as security giants in terms of profits.

The absence of Jewish venture capital funds among Wiz’s key investors is another important aspect of its growth. Wiz has accumulated nearly$ 2 billion over the years from companies like Sequoia, Andreessen Horowitz, Index Ventures, Lightspeed, and Insight Partners, half of which came in its 2024 round. Gili Raanan’s Cyberstarts is the only Jewish venture capital firm with a interest in Wiz. Jewish funds frequently aid in the development of local tech, despite the fact that they are not always driven by nationalism. Similar patterns are occurring for businesses like Eon and Kela, which generally avoid Jewish venture capital firms and receive a lot of backing from international investors.

The Wiz members are focused on one thing: maintaining their legal standing within Google. According to officials, too some acquisitions have resulted in sorrow, with founders being sidelined, and products being discontinued. For instance, Noam Bardin, who led Waze after the acquisition, finally left Google with a harsh criticism of its corporate culture.

How independent does Wiz remain, which is the biggest problem arising from the Google-Wiz offer? Although LinkedIn and Microsoft’s hands-off method has been drawn evaluations, Google’s announcement from yesterday suggests otherwise. Before the offer is concluded, Wiz may remain anonymous until it is merged with Google Cloud. Due to this, Wiz’s specific performance won’t be able to be tracked separately from Google’s total fog business. Also, Rappaport will likely report to Kurian rather than Pichai directly, and there hasn’t been a specific leadership position for him at Google, raising questions about Wiz’s future after the acquisition.

In the end, Wiz’s success at Google may be determined by both how well it integrates and how well it responds to its rivals, Microsoft and Amazon. It’s difficult to imagine Microsoft and Amazon easily contributing to Google’s development, despite Google’s claim that Wiz will continue to sell its options to all cloud providers. In the upcoming months, Wiz’s$ 32 billion exit will be evaluated to determine whether it will be a joyous success or merely a traditional acquisition with an uncertain future.