Federal regulators are scrutinizing Google’s planned $ 5.4 billion acquisition of Mandiant, a deal designed to strengthen the web giant’s cybersecurity capabilities in the public cloud.
In a classification [PDF] At the SEC this week, Mandiant officials said their company and Google had received a request from the Justice Department for more information, although no details of the data sought to be disclosed.
Both companies expect to respond quickly to this request and continue to work with the review of the proposed agreement, announced in early March, they said in the SEC filing. The merger is expected to take place again this year.
Announcing its offer on March 8, Google Cloud CEO Thomas Kurian said in a statement that “organizations around the world face unprecedented cybersecurity challenges because of the sophistication and severity of the attacks formerly used to target major governments is now used to target companies in all sectors ”.
The proposed acquisition comes at a time when large mergers, including IT, are coming under greater scrutiny from lawmakers and regulators in Washington DC. The DOJ’s further investigation is more about Google and the size of the offer than the impact on a crowded cybersecurity field, according to Bob O’Donnell, chief analyst at Technalysis Research.
“Any time you find a reasonably sized case, you get more tests, regardless of its location,” O’Donnell said. The register.
“That’s why any kind of deal that Google makes is likely to get more regulatory scrutiny, as well as Facebook and the other big players. It’s going to be monster nature moving forward. It’s going to be it is more difficult for them to make larger acquisitions. »
The government is stepping up its efforts
This was exemplified last month when two similar bills were proposed, one in the House of Representatives and another in the Senate, designed to give the DOJ or the Federal Trade Commission more leeway in stopping mergers that cost more. to $ 5 billion and giving more regulatory powers. to antitrust officials. Versions of the law banning anti-competitive mergers are still awaiting a vote.
The Justice Department taking a closer look at the Google-Mandiant merger is likely what every other major IT company will get in major acquisitions in the future, O’Donnell said.
“If it was Amazon, if it was Microsoft, if it was one of those people, the exact same thing would happen,” the analyst said. “Another thing to keep in mind is that there are a whole class of companies today, all the biggest players in technology, that the eyes of Congress and the regulatory world are on them and that‘ they’re going to be reviewed and the movements that are being made. they are closer than they have been in the past. »
He noted that there doesn’t seem to be any threat of monopolistic or antitrust issues that could emerge in the cybersecurity space from Google’s acquisition of Mandiant. For a large public cloud service provider like Google, security is an essential tool in the toolbox.
“Security is really a growing area for them, but it should be,” O’Donnell said. “You can’t be in cloud computing and company operating systems and everything else without security as a core competency. It only adds strength to a range of security capabilities they need to have in order to function. »
In an interview with The registerSunil Potti, vice president of security for Google Cloud, said its cybersecurity capabilities are an important part of the company’s strategy to compete with Amazon Web Services (AWS) and Microsoft Azure, which are the first and second largest cloud providers in the world, with Google in third place, according to Synergy Research Group.
“Your overall security cleanliness improves significantly when most of your workload is in the cloud,” Potti said in the interview. “This is our endgame, our real North. But along the way, we have to help modernize security because the opponents are not waiting.»
Before Google announced its bid for Mandiant, reports emerged that Microsoft was interested in buying the security vendor. But with Mandiant, Google Cloud can leverage its capabilities in areas such as threat and intelligence, automation and response tools, and managed defense.
Federal watchdogs aren’t the only hurdle the deal will face. About a month after the deal was not announced, a Mandiant shareholder filed a lawsuit in federal district court in New York to block the deal, accusing the company of incomplete and misleading statements to investors in financial filings. . in the SEC. ®