Google's (GOOG) $32B Wiz Acquisition Faces DOJ Antitrust Hurdle
Alphabet's (GOOG) (GOOGL) $32 billion acquisition of cloud security startup Wiz is under antitrust review by the U.S. Department of Justice. The investigation is still in early stages, but it signals that regulators are taking a close look at how big tech companies are expanding into new markets.
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Wiz provides tools to detect and block cybersecurity threats across cloud environments. The company collaborates with major platforms, including Amazon Web Services (AMZN), Microsoft Azure (MSFT), and Oracle (ORCL). Google says the deal will boost its cloud security offerings, an area where it's still trailing top competitors.
Deal or No Deal?
The DOJ's concern is whether this move could limit competition. Google already bought Mandiant for $5.4 billion in 2022. That deal went through, but the Wiz deal is much larger and comes at a time when the DOJ is more aggressive on tech mergers. The risk is that Google could start bundling key security features into its own cloud stack, potentially locking out competitors.
Regulators are already pushing back on Alphabet's dominance in online search and advertising. In two recent court rulings, judges found that the company operated illegal monopolies in both areas. The company now faces the threat of forced divestitures, including parts of its ad tech business and the Chrome browser.
This adds pressure to the Wiz deal. If blocked, Wiz stands to collect a $3.2 billion breakup fee, or 10% of the deal value. That size indicates the level of regulatory risk and how strongly Google wants to close. The outcome could shape the future of tech M&A. If regulators succeed in stopping one of the largest cybersecurity deals ever, it may raise the bar for any future acquisitions by Alphabet, Amazon, or Microsoft.
Procedure Could Take Months
Under the Biden administration, regulators took a hard stance on mergers and monopolies. The FTC, led by Lina Khan, became known for aggressively challenging big tech deals. That changed after President Trump returned to office and removed Khan earlier this year. Many expected a slowdown in antitrust enforcement. The DOJ's decision to probe the Wiz deal defies those expectations, signaling that cloud-related consolidation may still draw scrutiny.
Investors should closely monitor the development of this case. A green light could boost confidence in Google Cloud's expansion strategy. A block could trigger more scrutiny on other big tech players trying to grow by acquisition, not just innovation.
The deal is expected to face months of review. Whether it closes or not may hinge less on market logic and more on how Washington defines fair competition in the cloud era.
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