Google Is Reinforcing Its Cloud Business With New Cybersecurity Capabilities
With the acquisition of Mandiant, Google strengthens its cloud business, which is steadily expanding but still lags behind its main competitors Amazon Web Services (AWS) and Microsoft Azure.
- Google Cloud's revenue increased by roughly 45% to $ 5.54 billion in last year’s fourth quarter, accounting for around 7% of total quarterly revenue
- Mandiant will help Google sell a more holistic set of security programs that seek to prevent cyber intrusions
- Google is working to diversify from digital advertising, which comprises the bulk of its revenue and profit
- If regulators approve the deal, it will be Google's second-largest acquisition after its $ 12.5 billion Motorola Mobility acquisition in 2012
A Cybersecurity Leader
Founded in 2004, Mandiant has around 600 security consultants and 300 intelligence analysts on staff. Mandiant made headlines in 2013 when it published a report accusing China of cyber espionage. In 2020, the company discovered the SolarWinds hack, a major operation believed to be sponsored by the Russian government that infected systems throughout the US federal government.
- Corporations frequently contact Mandiant after discovering that they have been hacked
- As criminal ransomware gangs and state hackers are increasingly relying on the cloud for their operations, Mandiant will receive broad visibility through Google Cloud
Consolidation Wave Ahead
In a note to investors on Tuesday, Wedbush analyst Dan Ives stated, “With cyber attacks increasing by the day and cyber warfare underway from Russia/state sponsored cyber terrorism organizations, Google is doubling down on its cyber security footprint at the right time with Mandiant and looking to differentiate itself from the likes of behemoths Microsoft and Amazon in the cloud arms race.”
“We believe cyber names such as Varonis, Tenable, CyberArk, Qualys, Rapid7, SailPoint, and Ping standout as potential M&A candidates in cyber security (among a handful of private players) given these vendors laser focus on protecting next generation cloud workloads from cyber attacks.”
Following Cisco's $ 20 billion takeover offer for Splunk, Sapana Maheria, GlobalData's practice head of thematic research wrote last month: "Cybersecurity will continue to be a key driver of mergers and acquisitions in 2022". She went on to say that the market for security software is "ripe for deals".
Cybersecurity Stocks Take The Front Stage
Cybersecurity stocks have surged since the start of Russia's invasion of Ukraine as investor's attention toward the risk of online attacks has grown.
Daniel Ives and John Katsingris from Wedbush Securities wrote in a note following the invasion: “With many high profile cyber security attacks coming from Russia over the past few years it's a matter of when not if this increased cyber warfare activity kicks into the next gear”.
- As of Thursday, the cybersecurity focused ETFMG Prime Cyber Security ETF and First Trust Nasdaq Cybersecurity ETF have gained close to 7% since Feb. 24
- Meanwhile, the S&P500 has been flat hovering at around 4,200 points
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