Google-Wiz deal ‘litmus test’ for Trump admin handling of Big Tech

Seven months ago, alphabet He lost the Biden administration’s marquee lawsuit against the Justice Department, accusing it of maintaining an illegal monopoly during the search. A few weeks ago, Google’s pursuit of cybersecurity vendor Wiz was something that would have been the biggest deal to date, and some were filled with antitrust concerns.

With Donald Trump returning to the White House, the Alphabet has returned to the attack.

Alphabet on Tuesday agreed to buy the Withs with $32 billion in cash, almost $10 billion more than the price proposed in mid-2024, and said it expects trading to close next year, subject to regulatory approval.

Wiz sits in Google’s cloud division. This is far from the company’s dominant search business. Google is late Amazon and Microsoft Cloud infrastructure places regulatory cases against partnerships in a challenge to any manager.

The Federal Trade Commission under Lina Khan was well known for actively cracking down on transactions when it comes to high-tech transactions. Frustration Even prominent Democrat supporters like Reed Hoffman and Mark Cuban. Google’s pursuit of Wiz could be the first major test of new FTC Chair Andrew Ferguson. This is to measure how Trump 2.0 treats an industry that houses the six largest US companies by market value.

“We’re looking forward to seeing you get a better understanding of the benefits of our customers,” said Brad Haller, senior partner in the merger and acquisition of consulting firm West Monroe. “This means it’s happening relatively early this year, which means it can be used as a measuring stick.”

As a venture company, the deal will be a major breakdown for a venture capital firm in Silicon Valley. This has been struggling to generate returns since the early opening markets were primarily closed in early 2022 and large M&A rested. After peaking at $780 billion in 2021, VC Exit Value plummeted to $89.2 billion the following year and $71.6 billion in 2023. October Report From the Pitchbook and the National Venture Capital Association. In the third quarter of 2024, that number hit a four-quarter low.

“The massive acquisition strategy has returned to the VC-backed company menu,” Haller said.

Index ventures are WIZ’s biggest outside investors, followed by companies such as Sequoia Capital, Insight Partners and CyberStarts.

Leaving apart from dealing with Google in July, Wiz co-founder Assaf Rappaport wrote in a note to employees that the company would instead pursue an IPO. There are some indications that the IPO market is intensifying as artificial intelligence infrastructure companies CoreWeave, Digital Health Startup Hinge Health, Buy Now and later Lender Klarna all submitted prospectuses to the SEC.

Economic uncertainty represents the biggest headwinds as President Trump’s tariff challenges on top trading partners in China, Mexico and Canada and the substantial cuts in government spending have led to extreme market volatility and sparked concerns about business and consumer trust. NASDAQ is picking up the pace with its fifth straight drop since 2022 and its worst quarterly performance.

For Google, the appeal of acquiring Wiz seems worthy of potential regulatory risks. Reuters reportedciting the source, Wiz has agreed to a cancellation fee of over $3.2 billion. This is called “one of the highest rates in M&A history.”

Google declined to comment.

Founded in 2020, WIZ reached $100 million in annual revenues just 18 months later. The company’s cloud security products include prevention, aggressive detection and response, making attacks more crucial as rapid advances in AI make attacks more refined and potentially damaging.

“That price tag shows that Google was almost desperate to boost security authenticity before AI adoption attracted even more speed,” an analyst at Gordon Haskett wrote in a note Tuesday.

Google said in a statement On Tuesday, it announced the agreement that “the increasing role of AI and the adoption of cloud services have dramatically changed the security environment for customers, making cybersecurity more important in protecting emergency risks and protecting national security.”

With’s Blog post“Being part of Google Cloud effectively ties the rocket to your back,” Rappaport said.

The deal will face regulatory oversight, but “Google, in our view, will have a stronger case compared to consumer-centric acquisitions,” a Bank of America analyst wrote in a note after the announcement. The company said Google is less than 15% of the cloud services market.

Google’s biggest acquisition during Biden’s presidency was the $5.4 billion purchase of cybersecurity firms Mandian. The search giant wasn’t the only big tech company that felt the heat of regulation.

For Microsoft to ultimately close the $69 billion acquisition of Video Game Publisher Activision Blizzard in late 2023, the company had to endure a 21-month battle with regulators, including an injunction by the FTC. Agents too I sued Block Meta Acquisition of Virtual Reality Company despite the California District Court giving up on FTC’s efforts.

Beyond trading challenges, meta, appleAmazon and Microsoft are all accused of exclusive practices by either the Department of Justice or the FTC. In Google’s case, both agencies pursued action.

Khan told CNBC’s Squawk Box in January that he hoped that the next Trump administration would not depart the hook from the antitrust law pending on the “lovers’ deal.” Her comments come after numerous tech executives and businesses, including Google, pledged money to Trump’s inauguration fund.

Ferguson suggests that his FTC will look enthusiastically at technology, but he doesn’t provide much with details. During Trump’s first administration, the president had particularly hostile ties with the industry, routinely blaming Amazon founder Jeff Bezos, especially for ownership of the Washington Post, and targeting Meta and Google for the prejudice of their claims against his administration.

These former enemies made the extra effort to change the tone this time, whether it meant ending the diversity, equity and inclusion program or trekking to Washington, for Trump’s inauguration.

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

“President Trump has appointed me to protect Americans in the market,” Ferguson said. “And from day one, big technology has been one of our main priorities and that remains true.”

Jonathan Canter, former Attorney General of the Department of Justice’s Antitrust Division under Biden, said on CNBC’s “Power Ranch” on Tuesday there is a high possibility of a heavy regulatory review heading into the Google-Wiz deal. He said it’s not just Google’s position in the cloud, but the amount of data the company manages.

“I don’t think Wiz’s deal will be eased in the future for prompt approval,” said Kanter, a current CNBC contributor. “It’s going to be a long way. They need to look at a lot of documents, lot of data, and understand whether they really will entrench Google’s market power in many different markets.”

– CNBC’s Jordan Novel and Samantha Subin contributed to this report.

clock: Complete CNBC interview with FTC Chair Andrew Ferguson