This week marks a significant moment in the tech world. If finalized, the $32 billion acquisition of cloud security company Wiz by Alphabet, Google’s parent company, will become the largest acquisition of a private, venture-backed company ever. But will the deal go through?

The news isn’t a surprise to those closely following the cybersecurity industry. Just last year, reports indicated that Alphabet was in talks to acquire Wiz for $23 billion. At the time, the goal was the same: Alphabet wants to strengthen its position in the cloud services market, where it currently trails Amazon Web Services (AWS) and Microsoft Azure.

Wiz’s software helps businesses secure their cloud applications by identifying and addressing potential threats. This acquisition could help Google boost its security offerings and generate more revenue from its cloud services. Additionally, Wiz’s technology could play a crucial role in keeping systems secure in an era increasingly dominated by artificial intelligence (AI).

Challenges to the Deal
Despite the appeal of the acquisition, the deal faces obstacles. Last year, negotiations fell apart due to Wiz’s desire to remain independent and concerns about potential regulatory hurdles. The regulatory landscape, especially under the previous administration, was seen as challenging for big tech mergers.

While the new administration might bring some changes, there’s still uncertainty about how favorable the economic and regulatory climate will be for tech deals. One of the key figures to watch is Gail Slater, the new head of the Justice Department’s antitrust division, who has been critical of large tech companies like Google.

Additionally, Google has its own regulatory issues to address. A federal judge recently ruled that Google had illegally maintained a monopoly in the search and advertising markets, and there’s a possibility the company could face even more scrutiny or legal challenges.

The Future of Cybersecurity M&A
Even with these challenges, the deal is not out of the question. If it goes through, it would signal a major shift in the cybersecurity M&A landscape. The biggest deal in recent memory for a VC-backed company in this sector was Okta’s $6.5 billion acquisition of Auth0 in 2021.

The cybersecurity M&A market experienced a dip in 2023, with only 71 deals involving venture-backed companies. However, 2024 is already showing signs of a recovery, with 33 deals completed so far, according to Crunchbase.

Winners of the Deal
If the deal is finalized, many venture capital firms invested in Wiz will see a significant return. Last May, Wiz raised $1 billion in funding at a $12 billion valuation. Major investors in this round included Andreessen Horowitz, Lightspeed Venture Partners, Thrive Capital, and others, all of whom could see substantial profits as Wiz’s value has skyrocketed by 167% in less than a year.

While Wiz’s Massive Deal presents some challenges, it could become a game-changing move in the tech and cybersecurity industries. Whether it happens remains to be seen, but the stakes are high for all involved.