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Big technology firms are on the hunt for cloud security start-ups to help their corporate customers lock down their networks.
On Friday, Cisco agreed to buy the cybersecurity firm Duo Security for $2.35 billion. Duo’s technology allows companies to provide employees or customers with remote access. Its software verifies the identity of users, scans their device for security weaknesses and then lets them connect, a kind of supercharged username-and-password. Cisco said it would integrate Duo’s technology across its network, device and cloud platforms.
The acquisition is part of a trend in which cloud providers and cybersecurity companies are trying to bolster the services they offer.
Many businesses have turned to the cloud to run everything from human resources administration to artificial-intelligence analysis on remote computers. The attractions are numerous: The cloud allows workers to be more mobile, data to be accessible and processed from anywhere, and hardware systems to be less frequently updated.
Tech giants, especially Amazon and Microsoft, have capitalized on the trend. They have built the software and huge banks of servers that allow businesses to run their systems on remote computers.
The technology is a huge driver of growth at Amazon and Microsoft. In the quarter that ended June 30, for instance, Amazon’s cloud service generated $6.1 billion in net sales, up almost 50 percent from the same quarter in 2017. Gartner predicts that cloud revenue as a whole will grow by 21.4 percent in 2018.
But some organizations have balked at handing their data to third parties like Amazon.
“With more sensitive data and critical information needing to be protected in these cloud deployments, we believe security vendors stand to benefit,” wrote Daniel Ives, the chief strategy officer and head of technology research of GBH Insights, in a note this week.
Big tech companies have turned to acquisitions in recent years to “bolster their existing offerings to customers,” Mr. Ives said. Cisco alone paid $2.7 billion for the hardware and software maker Sourcefire in 2013, $635 million for OpenDNS in 2015 and $293 million for the cloud-security provider CloudLock in 2016.
But Cisco has hardly been the only buyer. In the past 12 months, Oracle acquired Zenedge, Amazon purchased Sqrrl, VMWare struck a deal for CloudCoreo, McAfee bought Skyhigh, and Symantec acquired Skycure.
The pace of such deals — particularly in identity management, like Duo — should only pick up over the coming years as companies try to strengthen their defenses against cyberthreats, Mr. Ives said.
