Google-Wiz deal “LITMUS test” for Trump to manage large tech

Seven months ago, letter The case against the Biden administration’s Justice Department is missing, which accused the company of maintaining an illegal monopoly in the search. A few weeks ago, Google pursued cybersecurity provider Wiz, the biggest deal ever, hoarse Part of this is due to antitrust attention.

and Donald Trump’s Return to the White House, the letters return to the offensive.

Tuesday’s letters agree The purchase of Wiz for $32 billion in cash is nearly $10 billion higher than the proposed price in mid-2024, and said the deal is expected to be completed next year, but subject to regulatory approval.

Wiz will sit in Google’s Cloud Division, a division far from the company’s main search business. Google is behind Amazon and Microsoft In cloud infrastructure, this position will put regulatory cases in a challenge to cooperation with any government.

As we all know, the Federal Trade Commission under Lina Khan is tricky when it comes to technology deals Frustrated Even famous Democratic supporters like Reid Hoffman and Mark Cuban. Google’s pursuit of WIZ could be the first big test for new FTC chairman Andrew Ferguson, as the tech industry measures how Trump 2.0 will handle the industry of six U.S. companies based on market value.

“It will be a great stone test and a leading M&A merger and acquisition,” said Brad Haller, senior partner at the merger and acquisitions of consulting firm West Monroe. “This happened relatively early this year, which means it can be used as a measuring rod.”

As a venture capital firm, the deal will be a major surprise for Silicon Valley venture capital firms, which has been working to generate returns since its IPO market Mainly closed In early 2022, large-scale mergers and acquisitions were dormant. According to one October report From Pitchbook and National Venture Capital Association. In the third quarter of 2024, this figure hit a quarter-low.

“The big acquisition strategy is back on the menu of VC-backed companies,” Haller said.

Index Ventures is WIZ’s largest outside investor, followed by companies including Sequoia Capital, Insight Partners and Cyberstarts.

Wiz co-founder Assaf Rappaport wrote in a memo to employees when he concluded a deal with Google in July that the company would seek an IPO. There are some signs that the IPO market is heating up as an AI infrastructure company CoreWeaveDigital Health Startup Hinge health Buy now and pay later Clear All recently proposed prospectuses to the SEC.

Economic uncertainty represents the biggest headwind as President Trump’s tariffs on top trading partners such as China, Mexico and Canada and massive cuts in government spending have led to extreme market volatility and raised concerns about business and consumer confidence. Nasdaq has fallen for the fifth consecutive quarter and its worst performance since 2022, which is the pace of Nasdaq.

For Google, getting the charm of Wiz seems worthy of potential regulatory risks. Reuters reportciting a source, Wiz agreed to the termination fee of more than $3.2 billion, which the publication called it “one of the highest fees in mergers and acquisitions history.”

Google declined to comment.

Founded in 2020 Wiz Annual recurring revenue of US$100 million Only 18 months later. The company’s cloud security products include prevention, aggressive detection and response, and they become increasingly important as rapid advances in AI make attacks more complex and potentially more destructive.

“This price tag tells us that Google is almost desperate to improve its security goodwill before adopting AI,” Gordon Haskett analysts wrote in a note on Tuesday.

Google is on statement “The role of AI and the increase in adoption of cloud services have greatly changed the security landscape for customers, making cybersecurity increasingly important in defending against emerging risks and protecting national security,” announced Tuesday.

On Wiz Blog Posts“Being part of Google Cloud effectively tucks the rockets on our backs,” Rappaport said.

The deal will face regulatory scrutiny, but “Google will have a stronger case than a consumer-centric acquisition.” The company said Google’s cloud services market is less than 15%.

Google’s biggest acquisition during Biden’s presidency was its $5.4 billion cybersecurity company purchase Intensive. Search giants aren’t the only big tech company that feels the heat of regulation.

Microsoft finally shuts down its Acquisition of $69 billion At the end of 2023, video game publisher Activision Blizzard was fighting regulators for 21 months, including the FTC’s ban work. The same is true for agents Prosecution Prevent Yuan Acquisition of virtual reality company in California District Court rupture FTC’s efforts.

Beyond the trading challenge, RMB, appleAmazon and Microsoft are both accused of monopolizing practices by the Department of Justice or the FTC. As far as Google is concerned, both agencies take action.

Khan told CNBC’s “Squawk Box” in January that she hopes the incoming Trump administration won’t let Amazon and Meta get out of the pending antitrust lawsuit in a “sweetheart deal”. Her comments have been published after many technical executives and companies Including Googlepledged to donate to Trump’s inauguration fund.

Ferguson suggests that his FTC will be keen on technology, although he doesn’t offer much through details. During Trump’s first administration, the president had a particularly hostile relationship with the industry Slam Amazon Founder Jeff Bezosespecially because of his ownership of the Washington Post, and his targets for Meta and Google The so-called prejudice Committed to his government.

Those former enemies put in extra effort this time to change the tone, does that mean Finish Diversity, equity and inclusion program or hike to Washington after Trump’s inauguration Before Visit his Mar-A-Lago Resort in Florida.

“Big Tech is one of the government’s main priorities,” Ferguson said in an interview on “Squawk Box” last week.

“President Trump appointed me to protect Americans on the market,” Ferguson said. “From the first day, I have said that Big Tech is one of our main priorities, and that’s still right.”

Jonathan Kanter, former assistant attorney general of the Antitrust Division of the Department of Justice, explain On Tuesday’s CNBC’s “Electric Lunch”, there could be a lot of regulatory scrutiny for the Google-Wiz deal. He said it was not only related to Google’s position in the cloud, but also to the amount of data the company controlled.

“I don’t think the Wiz deal is relaxing on the road to quick approval,” said Kanter, now a CNBC contributor. “It’s going to be a long road. They’re going to have to look at a lot of files, a lot of data, and see if it’s really going to solidify Google’s market power in many different markets.”

– Jordan Novet and Samantha Subin of CNBC contributed to the report.

watch: CNBC’s full interview with FTC Chairman Andrew Ferguson