Analysis: Google Cloud Inks An Interesting Deal With Palo Alto Networks

Even with the pending completion of the $32 billion acquisition of Wiz, Google Cloud is touting an ‘expanded collaboration’ with Palo Alto Networks on AI security.

The Google Cloud-Palo Alto Networks deal announced Friday comes at an interesting time.

I’m not primarily talking about the fact that the deal, described by the companies as a “landmark agreement,” was announced on the Friday before Christmas (though that is probably notable, too).

Instead, I’m mainly referring to the fact that Google is potentially in the final stages of acquiring one of Palo Alto Networks’ biggest rivals on cloud and AI security, Wiz.

Did I mention Google is paying $32 billion for Wiz, in what would be the tech behemoth’s largest acquisition ever?

To rewind the tape to earlier this year, that deal couldn’t have been thrilling for Palo Alto Networks CEO Nikesh Arora (pictured), given how closely his company has worked with Google (a company where Arora was formerly the No. 4 executive, no less).

Among other things, the Palo Alto Networks platform runs on Google Cloud. A Reuters report suggests that as part of the deal announced Friday, the cybersecurity giant is paying billions as part of re-upping its contract with the public cloud platform.

But what most caught my eye in the announcement is the prominent mention of a deepened partnership on AI security—and why even this move may have something to do with the Wiz deal.

On AI security, Palo Alto Networks said in a news release that it has agreed to an “expanded collaboration” with Google Cloud that will see its Prisma AIRS offering linked up with Google tools including Vertex AI and Agent Development Kit.

In other words, Google Cloud is doubling down on pushing AI security capabilities from Palo Alto Networks to customers in the run-up to buying another AI security trailblazer, Wiz, for a record sum.

The two things may not be unrelated, however.

In a note to investors Friday, TD Cowen managing director Shaul Eyal made the observation that, even with the U.S. Department of Justice recently clearing the Wiz deal, regulatory scrutiny may still be on Google’s mind while inking the Palo Alto Networks deal now.

“Toward regulators, we believe GOOG also wants to signal that they will not force a single stack,” Eyal wrote in the note.

Thus, the picture that Google Cloud wants to paint is one where “enterprises can adopt PANW’s Prisma AI security or Wiz’s agentless cloud security platform depending on needs, a dual approach aimed at broadening GCP’s appeal,” he wrote.

Still, it’s worth noting that the plan all along has been for Wiz to continue onward as the same Wiz it’s always been, with a large degree of independence and ability to continue operating as a multi-cloud platform for securing AWS and Microsoft Azure in addition to GCP. (The fact that Wiz just debuted a refreshed partner program a few weeks ago would also seem to suggest something approaching business-as-usual at the company.)

Ultimately, the fact of Google Cloud’s simultaneous, massive, long-term commitments to both Palo Alto Networks and Wiz is maybe not as surprising as it first seems.

It may just be one of those things that wouldn’t really have made sense in the past—but in the Wild West that is the AI era, is all but essential.