Google’s bid to buy cybersecurity company Wiz for $23 billion reportedly has fallen through, with one of the startup’s co-founder and CEO saying in an internal memo that it will now pursue an IPO instead.

The proposed deal would have been the largest acquisition by Google parent company Alphabet. Instead, Google executives will have to determine what their next step is.

In his memo to employees – which was seen by news outlets The New York Times, CNN, and CNBC, among others – Wiz CEO Assaf Rappaport said the decision to move away from such a lucrative deal was not an easy one to make.

“I know the last week has been intense, with the buzz about a potential acquisition,” Rappaport wrote. “While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz. Saying no to such humbling offers is tough, but with our exceptional team, I feel confident in making that choice.”

The goal now is to take the Israeli company public and to grow the business into one with at least $1 billion in recurring revenue, goals that Wiz executives had set before Google’s acquisition proposal.

Neither Google nor Wiz ever publicly acknowledge the proposed deal and so far have not commented on Wiz’s decision to walk away.

Double the Valuation

The deal would have almost doubled the value of Wiz. The four-year-old company in May announced a $1 billion fundraising round that pushed its valuation to $12 billion, adding to its coffers and helping it not only to grow organically but also to bring in capabilities via acquisitions. Wiz, which was founded by ex-Microsoft employees, in April bought cloud security vendor Gem Security, enabling it to expand its reach into the security operations center (SOC) area.

“I’ve said 2024 is the year of consolidation – for Wiz, and the industry at large,” Rappaport said when Wiz announced the latest funding round. “The days of sprawling tech stacks are drawing to a close, driven by the same thirst for consolidation that gave rise to the CNAPP [cloud-native application protection platform] category.”

Bringing Wiz into the fold would have given Google more enterprise cloud security tools. Wiz offers a single platform that offers a range of capabilities that can be used in a variety of cloud environments, including Google as well as Microsoft Azure, Amazon Web Services (AWS), and Oracle Cloud Infrastructure. Features include agentless scanning, risk assessment, graph visualization, threat identification, and developer tools.

Its customers includes Salesforce, Morgan Stanley, Priceline, Snowflake, and BMW.

Cloud Security Needs Grow

More companies are moving their workloads to the cloud and cybercriminals are following them. According to statistics collected by cybersecurity SentinelOne, 80% of companies have seen a jump in the frequency of cloud attacks, with 33% of those being data breaches. Other common threats include environment intrusions, cryptocurrency mining, and attacks involving failed audits.

In addition, 38% of software-as-a-service (SaaS) applications are targeted by hackers.

Such trends are driving rapid growth in the cloud cybersecurity field, with analysts with Fortune Business Insights predicting the global cloud security market will grow from $37.87 billion last year to $156.25 billion by 2032.

Given that, the Wiz capabilities would have helped Google as it competes with the likes of Amazon Web Services (AWS) and Microsoft in the booming cloud services market. Google in the fourth quarter 2023 held 11% of a worldwide cloud infrastructure services space that came in at almost $74 billion, $12 billion more than the same time the previous year, according to Synergy Research Group. Both Google and Microsoft – with 24% – grew their market shares while longtime leader AWS’ dropped to 31%.