Mandiant’s $5.4 billion Google Cloud deal accelerates security tech race with Microsoft and Amazon

Mandiant's $5.4 billion Google Cloud deal accelerates security tech race with Microsoft and Amazon

Google Cloud CEO Thomas Kurian sees the Mandiant acquisition as “an opportunity to provide an end-to-end suite of security operations.” (Photo from Google file)

Google’s deal to buy cybersecurity firm Mandiant for $5.4 billion, announced Tuesday morning, reflects a broader effort by leading cloud providers to give enterprises better defenses against a growing range of threats.

This comes as the Russian invasion of Ukraine illustrates the need for companies to strengthen these cyber defenses.

It also reflects an axis of growth for the cloud giants. Beggar revenue from continuing operations in 2021 grew 21% to $483 million and forecast more than $550 million in revenue for the current year as a standalone business.

Microsoft would have been in the running to acquire Mandiant, before bowing out. Last year, the Redmond company hired former Amazon executive Charlie Bell to lead its new cybersecurity engineering organization. Microsoft said in January that its security revenue in the previous 12 months exceeded $15 billion, up 45% year-over-year.

“The cloud security space is very competitive, and this deal only increases that competition even further,” said Phil Venables, Google’s chief information security officer, when answering a reporter’s question. on potential regulatory hurdles to completing the deal during a virtual press conference on Tuesday morning. .

Technology News Service information, who first reported Google’s discussions with Mandiantreported that some Google employees “have privately discussed the need for more security firepower to compete with Microsoft, which offers more security products for its Azure cloud customers, as well as with Amazon Web Services”.

In an internal FAQ filed with the Securities and Exchange Commission, Mandiant acknowledges that there were additional suitors. “Once we received Google’s offer, we had an obligation to consider that offer, as well as alternative opportunities,” the filing said. “After careful consideration, we have concluded that Google’s offer is in the best interest of our company, our shareholders and our customers.”

Synergy Research Group Table

Given its larger security footprint, Microsoft could have faced more government scrutiny than Google in an acquisition of Mandiant. Despite being in another tech sector, Microsoft already has its hands full with the regulatory review of its $68.7 billion deal to acquire Activision Blizzard.

Google Cloud follows Microsoft and Amazon with around 10% of the cloud infrastructure services market in Q4 2021, according to data compiled by Synergy Research Group.

Mandiant, based in Reston, Va., is known for its squadrons of security consultants and researchers who respond to cybersecurity incidents and provide the foundation for the company’s security technology platform.

“This is an opportunity to deliver an end-to-end security operations suite and expand one of the best consulting organizations in the world,” said Thomas Kurian, CEO of Google Cloud. in a press release announcing the deal.

Mandiant was founded by former US Air Force IT security officer Kevin Mandia, CEO of Mandiant, who will join Google as part of the deal. Formerly known as FireEye, the company gained attention for uncovering the SolarWinds attacks. The company last year sold the FireEye Symphony Technology Group business and was renamed Mandiant.

Analysts are split on whether Google’s move signals more deals to come.

“We believe this deal will have a major impact on the cybersecurity space, as cloud stalwarts Amazon and Microsoft will now be forced into mergers and acquisitions and further strengthen its cloud platforms,” ​​the company wrote. Wedbush analyst Daniel Ives in a note to clients after the deal. was announced Tuesday morning.

Matthew Hedberg of RBC Capital Markets was more cautious.

Hedberg wrote in a note to clients: “While we don’t believe this necessarily compels other large technology vendors to follow suit with a major near-term cybersecurity acquisition, we believe it further illustrates the importance cybersecurity in a cloud-driven world and expect technology vendors large and small to continue to invest (both organically and inorganically) to capitalize on market tailwinds.”