Google’s parent company, Alphabet Inc., is reportedly in discussions to acquire cybersecurity upstart Wiz Inc., as revealed by a source privy to the situation. The deal could culminate in an eye-popping $23 billion, positioning it as Alphabet’s most substantial acquisition to date.

Despite the ongoing negotiations, no definitive agreement has been reached, and discussions may still fall through, the source cautioned.

Both Alphabet and Wiz have refrained from commenting on these speculative talks, which were initially reported by the Wall Street Journal.

This potential acquisition emerges shortly after Alphabet abandoned its pursuit of customer relationship management firm HubSpot Inc., a move covered by Bloomberg News last week. Such a sizable acquisition as Wiz is rare for Alphabet, especially amidst the intensified scrutiny from antitrust regulators.

Google is already navigating several antitrust battles, including a significant lawsuit from the US Justice Department, which accuses it of monopolistic practices in online search and another targeting its digital advertising operations.

Alphabet has been amplifying its investment in its cloud services, including the rollout of advanced generative artificial intelligence tools for its clientele. Although Google trails behind Microsoft Corp. and Amazon.com Inc. in the cloud computing arena, its cloud division has recently reported back-to-back profitable quarters, following years of financial losses.

Acquiring Wiz, a specialist in cloud and cybersecurity, could bolster Google’s competitive stance against Microsoft and Amazon in the cutthroat cloud market.

With an increasing number of startups migrating their applications and data to the cloud, the sector is ripe with opportunities, particularly as generative AI applications and tools gain momentum. These AI tools necessitate vast datasets, typically stored in the cloud, for training purposes to generate outputs such as images, marketing campaigns, or software code, based on user prompts.

Based in New York, Wiz integrates with cloud storage solutions like Amazon Web Services or Microsoft Azure, scanning for and mitigating security vulnerabilities. Founded in 2020, Wiz was valued at $12 billion in a May funding round, which attracted prominent investors including Andreessen Horowitz, Lightspeed Venture Partners, and Thrive Capital.

If Alphabet proceeds with acquiring Wiz, it would follow its $5.4 billion purchase of cybersecurity firm Mandiant Inc. in 2022, marking its second-largest acquisition after the $12.5 billion Motorola Mobility deal in 2012