Google’s parent company, Alphabet, is currently in talks to acquire Wiz.ai, an Israeli cloud cybersecurity company, for a sum of $23 billion. The landmark deal has the potential to set records as both the largest acquisition of an Israeli company in the country’s history, as well as the largest acquisition ever made by the monolithic tech corporation responsible for the world’s leading search engine.

In an interview with ISRAEL21c, Dror Bin, an industry veteran and the CEO of the Israel Innovation Authority, offered insights into the significance of the potential acquisition.

Israel21c: First and foremost: how likely is this deal to go through? People are discussing it as though it’s a definite thing, but as of yet there’s no official word saying “Yes, we are absolutely going forward with this.”

Dror Bin: From my experience, it’s never done until it’s done. There’s still a commercial negotiation process, closing, and approvals from different authorities. It’s a process that could take a few months. While it’s hard to assess the probability, I believe there’s great interest from both parties to come to terms and sign the deal.

I21c: Why is Google so interested in acquiring Wiz?

DB: Google currently doesn’t have a significant cybersecurity player in their portfolio. They’re competing with Amazon and Microsoft on cloud services, and both of those companies have clear cyber strategies. Acquiring Wiz could fill this gap for Google, especially in cloud security.

I21c: What is it about Wiz, specifically, that makes it worth so much money to Alphabet?

DB: Wiz is really exceptional. They were established only four years ago and have already reached hundreds of millions of dollars in revenue. Their growth rates are phenomenal – it’s very rare to see such rapid growth in this industry. Their technical solution and business model are very competitive.

I also assume that Google did their own work and checked all the other possibilities in the market and found that Wiz is the most suitable for their strategy.

I21c: To zoom out for a moment: this deal is happening during a challenging time for Israeli high-tech, and the country as a whole. Do you feel that this is a sign of growing international confidence in Israel?

DB: It’s certainly a sign of confidence. For a multinational company to acquire an Israeli company with such a large amount of money, it means they believe in the strength of the Israeli tech hub and its ability to continue delivering despite the challenges. It suggests they’re thinking about the mid and long-term potential.

When people look at Israel from abroad, they believe that in the short term — which could be weeks or months — the war will be over. And for the midterm and long term, the fundamentals of the Israeli tech hub are strong: the human talent here, the very bold entrepreneurs that we have locally, the sophisticated investors.

I21c: International investment in Israel took a significant blow in 2023 due to the controversy around the judicial reform attempts by the current government, and the war in Gaza has certainly not done much to reverse that trend — do you think this deal might influence other international investors to put Israel back in their portfolios?

DB: Yes, I believe it could. Investors typically don’t like uncertainty, and many might be inclined to postpone decisions during wartime to see how things develop. But seeing a company like Google make such a bold move might cause other investors and multinationals to think twice about holding back [from investing in Israel].

I21c: There’s also been a trend of new startups from Israel registering their companies abroad for a host of reasons, from better global perception to avoiding economic uncertainty. Do you think this deal could impact that trend?

DB: No, I don’t think this will have an influence on early-stage entrepreneurs. I think they have a lot of things they think about when they decide where to register their company… I don’t see a connection there.

I21c: Within the arrangement of this deal, what do you think Alphabet’s intentions are with the company’s staff and operations? Is a relocation in the cards?

DB: I don’t have inside information, [but] Google already has a significant presence in Israel with about 2,500 employees and a very large R&D center. I don’t see any reason why they should move people from here if they are already so invested.

We can also learn from the past: the same entrepreneurs [behind Wiz] sold their previous company to Microsoft and it was developed into a very large R&D center for Microsoft in Israel, which only keeps expanding.

Taking these two points, I think that it’s more likely that Google will maintain the R&D center in Israel and probably even grow it. But all the options are on the table. I cannot make any assumptions about their decisions.

I21c: Looking ahead, do you see more big deals like this on the horizon?

DB: Absolutely. I think the time is ripe for many acquisitions, not just for Israeli companies. Valuations have become more realistic after the adjustments of 2023, and 2024 seems to be a good time for acquirers to buy solid business and technological assets at reasonable prices. While we may not see many deals of this magnitude, I expect to see more acquisitions coming up.