Google-Wiz deal is ‘litmus test’ for Trump administration’s handling of Big Tech
The Wiz logo on a smartphone arranged in New York, US, on Tuesday, July 16, 2024.
Gabby Jones | Bloomberg | Getty Images
Seven months ago, Alphabet lost a marquee case against the Biden administration’s Justice Department, which accused the company of maintaining an illegal monopoly in search. Weeks earlier, Google’s pursuit of cybersecurity vendor Wiz, in what would have been its largest deal ever, fizzled in part because of antitrust concerns.
With Donald Trump’s return to the White House, Alphabet is back on the offensive.
Alphabet on Tuesday agreed to buy Wiz for $32 billion in cash, almost $10 billion more than the proposed price in mid-2024, and said it expects the deal to close next year, subject to regulatory approvals.
Wiz will sit in Google’s cloud division, which is far from the company’s dominant search business. Google is behind Amazon and Microsoft in cloud infrastructure, a standing that would make the regulatory case against a tie-up challenging for any administration.
The Federal Trade Commission under Lina Khan was notoriously prickly with respect to tech deals, aggressively scuttling transactions in ways that frustrated even notable Democrat supporters like Reid Hoffman and Mark Cuban. Google’s pursuit of Wiz may be the first big test for new FTC Chair Andrew Ferguson, as the tech industry gauges how Trump 2.0 will treat the industry that houses the six biggest U.S. companies by market value.
“It’s going to be a great litmus test and bellwether for M&A in 2025,” said Brad Haller, senior partner for mergers and acquisitions at consulting firm West Monroe. “This happening relatively early on this year means it can be used as a measuring stick.”
As a venture-backed company, the deal would be a major windfall for Silicon Valley venture capital firms, which have struggled to generate returns since the initial public offering market mostly shut down in early 2022 and large M&A went dormant. After peaking at $780 billion in 2021, VC exit value plummeted to $89.2 billion the following year and to $71.6 billion in 2023, according to an October report from PitchBook and the National Venture Capital Association. In the third quarter of 2024, the number hit a five-quarter low.
“Large acquisition strategy is back on the menu for VC-backed companies,” Haller said.
Index Ventures is the largest outside investor in Wiz, followed by firms including Sequoia Capital, Insight Partners and Cyberstarts.
In walking away from a deal with Google in July, Wiz co-founder Assaf Rappaport wrote in a memo to employees that the company would instead pursue an IPO. There are some signs that the IPO market is heating up, as artificial intelligence infrastructure company CoreWeave, digital health startup Hinge Health and buy now, pay later lender Klarna have all filed prospectuses recently with the SEC.
Economic uncertainty represents the biggest headwind, as President Trump’s imposition of tariffs on top trading partners like China, Mexico and Canada, as well as massive cuts in government spending, have led to extreme market volatility and raised concerns about business and consumer confidence. The Nasdaq is on pace for its fifth straight weekly drop and worst quarterly performance since 2022.
For Google, the allure of acquiring Wiz appears to be worth the potential regulatory risk. Reuters reported, citing a source, that Wiz agreed to a termination fee of over $3.2 billion, which the publication called “one of the highest fees in M&A history.”
Google declined to comment.
Founded in 2020 Wiz hit $100 million in annual recurring revenue after just 18 months. The company’s cloud security products include prevention, active detection and response, and they’ve become increasingly essential as rapid advancements in AI have made attacks more sophisticated and potentially more damaging.
“That price tag tells us that Google was almost desperate to boost its security bona fides before the adoption of AI gathers even more speed,” Gordon Haskett analysts wrote in a Tuesday note.
Google said in a statement on Tuesday announcing the deal that, “The increased role of AI, and adoption of cloud services, have dramatically changed the security landscape for customers, making cybersecurity increasingly important in defending against emergent risks and protecting national security.”
In Wiz’s blog post, Rappaport said that, “Becoming part of Google Cloud is effectively strapping a rocket to our backs.”
The deal will face regulatory scrutiny, but “Google, in our view, would have a stronger case compared to consumer-focused acquisitions,” analysts at Bank of America wrote in a note after the announcement. The firm said Google has less than 15% of the cloud services market.
Industrywide scrutiny
Google’s biggest acquisition during the Biden presidency was its $5.4 billion purchase of cybersecurity company Mandiant. The search giant wasn’t the only Big Tech company feeling the regulatory heat.
For Microsoft to eventually close its $69 billion acquisition of video game publisher Activision Blizzard in late 2023, the company had to endure a 21-month battle with regulators, including an injunction effort by the FTC. The agency also sued to block Meta’s acquisition of virtual reality company Within, though a California district court scuttled the FTC’s efforts.
Beyond dealmaking challenges, Meta, Apple, Amazon and Microsoft have all been accused of monopolistic practices by either the Justice Department or the FTC. In Google’s case, both agencies pursued actions.
Khan told CNBC’s “Squawk Box” in January that she hoped the incoming Trump administration wouldn’t let Amazon and Meta off the hook from pending antitrust suits with a “sweetheart deal.” Her comments came after numerous tech execs and companies, including Google, pledged money towards Trump’s inauguration fund.
Ferguson has suggested that his FTC will keep a keen eye on tech, though he hasn’t offered much by way of specifics. During Trump’s first administration, the president had a particularly hostile relationship with the industry, routinely slamming Amazon founder Jeff Bezos, notably for his ownership of The Washington Post, as well as taking aim at Meta and Google for their alleged biases towards his administration.
Those former foes have made extra efforts to change the tone this time around, whether that means ending diversity, equity and inclusion programs or trekking to Washington for Trump’s inauguration after previously making visits to his Mar-a-Lago resort in Florida.
In an interview on “Squawk Box” last week, Ferguson said “Big Tech is one of the main priorities” of the administration.
“President Trump appointed me to protect Americans in the marketplace,” Ferguson said. “And I’ve said since day one, Big Tech is one of our main priorities, and that remains true.”
Jonathan Kanter, former assistant attorney general for the Department of Justice’s antitrust division under Biden, said on CNBC’s “Power Lunch” on Tuesday that a hefty regulatory review is likely on the way for the Google-Wiz deal. He said it’s not just about Google’s position in cloud, but also the amount of data the company controls.
“I don’t think the Wiz deal is going to ease on down the road to quick approval,” said Kanter, who is now a CNBC contributor. “It’s going to be a long road. They’re going to have to look at a lot of documents, a lot of data and understand whether it’s really going to entrench Google’s market power in a lot of different markets.”
— CNBC’s Jordan Novet and Samantha Subin contributed to this report.
Nvidia CEO Jensen Huang delivers the keynote address during the Nvidia GTC 2025 at SAP Center on March 18, 2025 in San Jose, California.
Justin Sullivan | Getty Images
Nvidia said on Tuesday that it will take a quarterly charge of about $5.5 billion tied to exporting H20 graphics processing units to China and other destinations. The stock slid more than 6% in extended trading.
On April 9, the U.S. government told Nvidia it would require a license to export the chips to China and a handful of other countries, the company said in a filing.
The disclosure is the strongest sign so far that Nvidia’s historic growth could be slowed by increased export restrictions on its chips, which the U.S. government says can be used to create supercomputers for military uses. Nvidia reports fiscal first-quarter results on May 28.
During President Biden’s administration, the U.S. restricted AI chip exports in 2022 and then updated the rules the following year to prevent the sale of more advanced AI processors. The H20 is an AI chip for China that was designed to comply with U.S. export restrictions. It generated an estimated $12 billion to $15 billion in revenue in 2024.
Nvidia CEO Jensen Huang said on the company’s last quarterly earnings call in February that revenue from China had dropped to half of pre-export control levels. Huang warned that competition in China is growing, and for the second straight year, Nvidia listed Huawei as a competitor in its annual filing.
China is Nvidia’s fourth-largest region by sales, after the U.S., Singapore, and Taiwan, according to the company’s annual report. More than half of its sales went to U.S. companies in its fiscal year that ended in January.
Nvidia’s H20 chip is comparable to the H100 and H200 AI chips used in the U.S. and other countries, but it has slower interconnection speeds and bandwidth. It’s based on a previous generation of AI architecture called Hopper introduced in 2022. Nvidia is now focusing on selling its current generation of AI chips, called Blackwell.
DeepSeek, the Chinese company whose competitive AI model R1 unveiled earlier this year upended markets, used H20 chips in its research.
In addition to the existing Chinese export controls, Nvidia also faces new restrictions on what it can export starting next month, under “AI diffusion rules” first proposed by the Biden administration.
Nvidia has argued that further controls on its chips would stifle competition and potentially even erode U.S. competitiveness in technology. The company previously said it moved some of its operations, including testing and distribution, out of China after the 2022 export controls.
At the company’s annual conference last month, when asked about Chinese export controls, Huang said Nvidia works to comply with the law, but he also noted that about half of the world’s AI researchers are from China, and many of those work at U.S.-based AI labs.
Nvidia said in Tuesday’s filing that the U.S. government told the company on Monday that the license requirement for H20 chips would be in effect “for the indefinite future.”
Nvidia shares have dropped 16% this year, largely due to President Trump’s announcement of widespread tariffs on top trading partners. While exemptions have been made on various electronics products, including smartphones, computers and semiconductors, Trump and some officials said over the weekend that the reprieve was temporary and part of plans to apply separate tariffs to the sector.
Shares of Advanced Micro Devices dropped more than 7% in after-hours trading on Tuesday following Nvidia’s disclosure. AI chipmaker Broadcom fell almost 4%.
WATCH: Nvidia says U.S. requires license to export H20 products to China
Dylan Field, co-founder and CEO of Figma Inc., after the morning sessions at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on July 11, 2024.
Bloomberg | Bloomberg | Getty Images
Design software maker Figma said on Tuesday that it has submitted paperwork to the U.S. Securities and Exchange Commission for an initial public offering.
The confidential filing lands 16 months after the company scrapped a deal to be acquired by Adobe for $20 billion due to regulatory pressure in the U.K. The San Francisco startup had originally agreed to the deal 2022. Adobe paid Figma a $1 billion termination fee.
Figma’s software is popular among designers inside companies who need to collaborate on prototypes for websites and apps. The company was valued at $12.5 billion in a 2024 tender offer.
“There are two paths that venture-funded startups go down,” Dylan Field, Figma’s co-founder and CEO, said in an interview with The Verge last year. “You either get acquired or you go public. And we explored thoroughly the acquisition route.”
The announcement lands at a precarious moment for the tech IPO market, which has been largely dormant since late 2021. The Trump presidency was expected to revive new offerings due to promises of less burdensome regulations.
But after filing their prospectuses with the SEC, fintech company Klarna and online ticket marketplace StubHub delayed their IPOs earlier this month following the market turmoil caused by Trump’s announcements on widespread tariffs. Digital banking service Chime, which had filed confidentially with the SEC, also postponed its planned offering.
Turo, a car-sharing service, withdrew its IPO prospectus in February, three years after filing its initial prospectus.
Figma was founded in 2012 and is backed by investors including Andreessen Horowitz, Durable Capital, Greylock Partners, Index Ventures, Kleiner Perkins and Sequoia Capital. The company, which ranked 26th on CNBC’s Disruptor 50 list in 2024, had about $600 million in annual revenue as of early last year.
— CNBC’s Ari Levy contributed to this report.
Technology
Meta CEO Mark Zuckerberg considered spinning off Instagram from Facebook in 2018: FTC trial
Thilina Kaluthotage | Nurphoto | Getty Images
Meta CEO Mark Zuckerberg considered spinning out Instagram in 2018 on concerns about the rising threat of antitrust litigation against Facebook, according to an email presented Tuesday in a Washington, D.C. courtroom.
During Zuckerberg’s second day of testimony in Meta’s antitrust trial with the Federal Trade Commission, lawyers representing the FTC introduced an email from May 2018, in which Zuckerberg appeared to comment on the possibility of separating the photo-sharing app his company purchased in 2012 for $1 billion.
“And i’m beginning to wonder whether spinning Instagram out is the the only structure that will accomplish a number of important goals,” Zuckerberg wrote in the email. “As calls to break up the big tech companies grow, there is a non-trivial chance that we will be forced to spin out Instagram and perhaps WhatsApp in the next 5-10 years anyway. This is one more factor we should consider.”
Facebook bought Instagram in 2012, when the photo app had 13 employees and Zuckerberg was poised to take his company public in what, at the time, was the largest tech IPO on record. The purchase of Instagram and 2014 acquisition of WhatsApp for $19 billion are at the heart of the blockbuster antitrust trial that kicked off Monday and could last weeks.
The FTC alleges that Meta monopolizes the social networking market, and has argued that the company shouldn’t have been able to complete those acquisitions. The agency is seeking to cleave the apps from Meta as a possible remedy.
Meta disputes the FTC’s allegations and claims the regulator mischaracterizes the competitive landscape and fails to acknowledge a number of rivals like TikTok and Apple’s iMessage, and not merely other apps like Snapchat. Earlier in the trial, the FTC also presented an Oct. 2013 email in which Zuckerberg told other Facebook executives that Snap CEO Evan Spiegel rebuffed his $6 billion offer to buy Snapchat.
Zuckerberg also said in the 2018 email that the company’s “best estimates are that, had Instagram remained independent, it would likely be around the size of Twitter or Snapchat with 300-400 million MAP today, rather than closer to 1 billion.” MAP is short for monthly active people.
WATCH: Mark Zuckerberg takes witness stand on first day of antitrust trial.
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