Alphabet invests $5.4 billion in cybersecurity, why?

Alphabet invests $5.4 billion in cybersecurity

Google’s parent company, Alphabet, issued a press release earlier this month announcing the purchase of cybersecurity company Mandiant. Why does Alphabet decide to invest so much in this sector?

Alphabet reiterates its commitment to cybersecurity

This is how, if approved by the regulators, it will be the second largest acquisition in the history of Google, just behind the purchase of Motorola for US $ 12.5 billion in 2012. In fact, it will also be This is the second major corporate change for Mandiant in less than a year. In June 2021, Mandiant and FireEye split.

In this way, the purchase of Mandiant by Alphabet for an approximate value of $5.4 billion dollars, translates into a valuation per share of $23. This is a premium of approximately 5% with respect to the current share price.

A necessary investment

Ruth Porat, CFO at Alphabet, explained to CNBC that the company hopes Mandiant will help it meet the “idiosyncratic” needs of customers found in various industries.

“It will allow us to provide this end-to-end solution in this very important area, and once again it’s because of our commitment to cybersecurity; but also to everything we are doing in the cloud. The investments and focus start with: Let’s make sure we have the depth and breadth within industry verticals so we can address the idiosyncratic needs within each industry, whether it’s finance versus retail versus healthcare.”

Likewise, Porat explained that these types of investments are necessary for Alphabet to remain competitive against other players; especially cloud competitors like Amazon Web Services and Microsoft Azure.

Porat also emphasized that although Alphabet remains focused on the long-term path to profitability; In the short term, it is necessary to invest in all areas to support the cloud.

The cybersecurity problem

An IBM Cost of a Data Breach 2021 annual report is cited in a Nasdaq article. According to the report, the global average cost of a data breach incident increased 10% last year; being US$ 4.24 million. But in the United States alone, the average cost of such an incident is $9 million.

Therefore, Alphabet sees that cyber incidents are on the rise in frequency and are becoming more costly. In this sense, the company’s investment would be a smart move.