Microsoft Acquires Security Startup Adallom, Adds All-Important Policy Enforcement Technology

Microsoft said Tuesday that it has closed its acquisition of Adallom, a 3-year-old Israel-based cloud security startup, in a move that brings all-important policy enforcement technology to its cloud portfolio.

Terms of the deal weren't disclosed, but The Wall Street Journal reported in July that Microsoft paid $320 million in cash to acquire Adallom.

Adallom develops what's known as a cloud access security broker, or software that ensures that cloud apps are accessed in a way that conforms with enterprise security policies.

[Related: Microsoft Reportedly Pays $320 Million To Acquire Cloud Security Startup Adallom]

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When used in conjunction with Microsoft Active Directory and Azure Active Directory, this gives customers extra security, Takeshi Numoto, Microsoft's corporate vice president of cloud and enterprise marketing, said in a blog post.

"As a cloud-delivered, security-as-a-service solution, Adallom will complement existing offerings that Microsoft makes available today as part of Office 365 and the Enterprise Mobility Suite (EMS), including our recent Microsoft Advanced Threat Analytics release," said Numoto in the blog post.

Tal Klein, vice president of strategy at Lakeside Software, Bloomfield Hills, Mich., and former vice president of marketing at Adallom, told CRN he sees the deal as "very strategic, because Active Directory is probably the most significant component of Microsoft's dominance in the enterprise."

While some industry watchers have interpreted the Adallom deal as a competitive move against enterprise mobility management vendors, Klein said he thinks it will put pressure on identity and access management (IAM) vendors like Okta and Ping Identity.

"By offering an additional active security layer on top of Azure Active Directory, and extending visibility and control beyond Office 365 to popular SaaS applications like Google Apps and Salesforce, Microsoft is going a long way towards utterly commoditizing the value of IAM solutions and vastly reducing those vendors' addressable market," Klein said in an email.

In a further sign that the cloud IAM space is heating up, Okta revealed a $75 million funding round Tuesday that gives the startup a valuation of $1.2 billion, and said it's working toward an IPO.

Adallom also sells a cloud auditing service that continually monitors cloud apps in order to pinpoint and prevent suspicious behavior. The startup, which emerged from stealth in 2013, has technology partnerships with Microsoft, Google, Amazon Web Services,, SAP and Hewlett-Packard, among others.