Google Deal Is A Step On Long Road To Cloud Parity

Google (GOOGGOOGL) needs no help to detect its biggest threat in the cloud. Lagging in market share, the Alphabet unit said on Tuesday it will bolster its cloud services by spending $5.4 billion to acquire cybersecurity firm Mandiant (MNDT). It’s a sensible move that also keeps a market leader out of Microsoft’s hands. But catching up with this rival will take more work.

Mandiant, once the crown jewel of larger security firm FireEye, made its name responding to high-profile cyberattacks like the infamous 2020 SolarWinds breach. FireEye, then valued at around $5 billion, acquired Mandiant for around $1 billion in 2014. In 2021, the latter sold the FireEye business for a little more than $1 billion.

Such reversals of fortune are common in cybersecurity, where technology evolves rapidly. New generations of companies regularly threaten to displace older competitors. Mandiant, for example, faces such a threat from companies like CrowdStrike and Arctic Wolf. Meanwhile, giants like Microsoft are buying and building their own solutions. The Redmond-based company recorded $15 billion in security revenue in 2021.

With ransomware and phishing attacks increasing inexorably, cybersecurity is key for cloud services offerings. Microsoft’s relative strength in this area may help to partly explain why it is running so far ahead of Google’s cloud unit. Microsoft’s 22% market share last quarter compared with Google’s 9%, according to technology analysis firm Canalys.

Microsoft, which Bloomberg reported also considered buying Mandiant, signed a partnership with the company in 2021. Allowing the two companies to develop close ties would have been a blow to Google. That may help explain the rich 57% premium paid by the Alphabet division to seal the deal. But this only heads off an immediate threat since Microsoft could acquire one of the newer wave of cybersecurity providers, such as Arctic Wolf. Also, in the most recent quarter, Google’s cloud business reported sales that were only around a third as big as Microsoft’s. The Mandiant deal makes sense, but Google still has a lot more work ahead.

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Or Sign in with