Morning Brew Daily - Google Closes Historic $32B Deal & Nvidia Drops Hot New AI Chip

Episode Date: March 19, 2025

Episode 542: Neal and Toby discuss the biggest M&A deal in Alphabet’s history after it acquired cybersecurity company Wiz for $32B. Then, a corporate espionage story involving two dominant HR software companies that could be taken straight out of a Hollywood script. Plus, Nvidia hosts its highly anticipated GTC event which just unveiled its latest AI chip. Also, tennis superstar Novak Djokovic is leading the charge for his tennis players’ union to reform the governing bodies over Tennis, claiming they’re a “cartel” preventing equitable player pay.  Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Learn more at sophos.com Get your MBD mug here: https://shop.morningbrew.com/products/morning-brew-daily-mug  Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning, Brewed Daily show. I'm Neil Fryman. And I'm Toby Howell. Today, Google eased on down the road with a record-breaking acquisition of Wiz. Then pro tennis players are not happy with their working conditions and are suing to do something about it. It's Wednesday, March 19th. Let's ride. Home at last.

Yesterday evening, NASA astronauts Sunni Williams and Butch Wilmore splashed down off the coast of Florida, ending a space saga that captivated the world. Originally intended to be an eight-day mission, their stay on the International Space Station lasted 286 days due to technical problems with the Boeing Starliner spacecraft that carried them up to the ISS. During their nine-month journey, Wilmore and Williams covered some distance. They orbited the Earth 4,576 times, traveled 121 million miles, and played over 142,000 rounds of Never Have I Ever. Toby, gravity has never felt so good. Gravity is undefeated. One of the coolest parts of a splashdown off the Gulf Coast of Florida is civilians generally know where it will happen. So some boaters kind of get out there and try to watch it.

But SpaceX and the Coast Guard, they work to keep them away so they can do the retrieval safely. But you can't control what happens under the water, which was why it was very funny that this huge pot of dolphins swam up while the retrieval was happening. They're curious animals. They just wanted to see what was going on. but not a bad unplanned welcome crew after 280 days up in space. I hope SUNY and Butch just kick back, watch some NCAA tournament games and just do nothing for the next days. They've been working a long time. Now a word from our sponsor, Sophos, Neil, the NCAA tournament is kicking off in earnest tomorrow,

and I for one know exactly who I am picking. Florida, Duke, or Cinderella? No, I am simply picking the team with the best offense and the best defense. That is not how it works, Toby. You can't just have the best of both worlds. Well, you can in cybersecurity. With SOFOS, your business gets both elite defense and expert offense. With 500 plus cybersecurity analysts, SOFOS provides managed detection and response.

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Get a quote or find an agent today at thehart.com slash small business. Kenny Rogers may have coined no when to hold them, no when to fold them, but cybersecurity startup WIS just perfected the strategy. After rejecting an acquisition offer from Google for $23 billion last summer, Wiz now says you've got a deal. Google will buy it for $32 billion, a big bump from the previous bid.

That's not all that's big about this deal. It's Google's biggest acquisition in history, far outstripping number two, a $12.5 billion purchase of Motorola Mobility in 2012. It's also the biggest acquisition announced this year, a hopeful sign for deal-making activity that's as frozen as Lake Erie in the winter. And finally, it's the biggest deal ever

in the fast-consolidating cybersecurity industry. In-Wiz, Google is acquiring one of the fastest-growing startups of all time. Founded just five years ago by CEO, a soft rap report, and several colleagues, it is on track to double last year's annual recurring revenue to $1 billion, and its sale would mark the largest exit for any tech startup since Rivian's $77 billion IPO all the way back in November 2021. Toby, Google just revealed its Philly cheese steak order, Wizz Witt, and it's a landmark deal. It is a landmark deal. It does show a potential sign of hope for the merger and acquisition market because this new Lena Conless FTC might be exactly why this

deal got done and why it didn't get done at that $23 billion valuation last year. This is its biggest deal ever. So it's definitely going to test the appetite of Trump's administration's antitrust efforts because they, when Trump originally joined office, they thought it was going to be a boon for M&A deals. That has been maybe not the case so far early in early in the year so far. So putting one of the biggest tech deals of all time up for antitrust scrutiny, that will really show what the kind of purview of this new administration will be. So that's one big reason why this was a big deal. And the other is that WIS offers a lot in the terms of the cloud computing race that's going on between big tech right now. Obviously, Amazon and Microsoft dominate the space right now, but Google Cloud

is trying to claw back some market share. So this acquisition is definitely going to help boost its efforts in cloud computing, which is obviously a huge growth sector for a lot of these big tech companies. And WIS brings with it not just growth potential, but an already existing massive list of business. Its client base includes over 45% of Fortune 100 companies. It's going to do $1 billion in revenue this year. It is just such a massive player in the space that they built in just the past five years. So in its race to compete against Microsoft and Amazon, Google thinks that attacking on, WIS, will be a huge tailwind to compete in this cloud computing race. Right. And if you are a business that needs cloud computing, one of the things that you're

looking at, one, obviously, there's price. And so you look at AWS, you look at Microsoft's Azure Cloud, you look at Google Cloud. But now if Google can come to you and say, hey, we're going to provide the most secure cloud. That is a huge leg up in this race for supremacy in cloud computing. And it's also actually one of WIS's big factors is that they work with a bunch of different cloud providers. And so the flexibility that WIS allows is something that Enterprise customers like to see. And so even though Google is buying this,

they're still allowing WIS to work with Azure. They're still allowing WIS to work with AWS because that flexibility is a selling point. So they're not just hoarding WIS for themselves. They're still letting it work with other customers. But I think that's a smart way to get a bigger piece of this much, you know, this very lucrative pie. And meanwhile, so many people are going

to get so rich from this deal. Obviously, a soft rap report, the CEO, and these co-founders are going to be billionaires if they weren't already, because guess what? They already sold a company to Microsoft in 2015 for 320 million. So they've done this rodeo before. Obviously, $32 billion is way more than 320 million. And it's also a huge exit for VC firms that plowed money into WIS when they were a much smaller company. Some of the biggest VC names in Silicon Valley were involved in WIS, Andreessen Horowitz, Sequoia, Lightspeed, all of these venture firms are, you know, their offices are probably a very fun place to be this week. Somehow Bernard Arnault, the founder or the, the patriarch of LVMH also got on the cap table. So people were kind of ironically saying, oh, thank goodness like

Bernard got on this one. But you're right. It is finally this liquidity moment for an industry that's been very stuck up and very clogged for the last few months and years or so. There is a crisis developing in HR, but don't worry, it has nothing to do with what happened at your holiday Christmas party. Ripling, an HR startup, is suing Deal, also in HR startup, over a bout of corporate espionage. Ripling is accusing deal of installing a mole inside its company and sending him digging around for trade secrets. The so-called spy is an Ireland-based employee who is snooping through Slack channels way outside his job description, according to the suit. One of the more egregious examples was the frequency in which he was searching for deal in

internal channels as many as 23 times a day, in addition to downloading strategy decks and allegedly passing that info over to deal. When Rippling and noticed the ab-normal slack activity, they set up what's known as a honeypot to attract and ensnare the alleged spy. Execs created a fake Slack channel, pretending it was a secret space where employees could trash talk deal. Then they baited the potential mole with an email hinting at this juicy channel. Just hours later, their suspect went looking for it, proving at least to Rippling that deal was up to something dodgy. Deal, for its part, fired back against the allegations saying weeks after Rippling is accused of violating sanctions law in Russia,

in seeding falsehoods about deal. Rippling is trying to shift the narrative with these sensationalized claims. there are Russian sanction violation involved too somehow. This isn't two minnows duking it out either. Rippling is worth $13 billion while deal sits at $12 billion valuation. Neil, with a spy on the loose too, apparently. Yeah, this is a heated rivalry that just escalated in a big way this week. The HR tech space has been, is extremely competitive.

You have these legacy players like ADP, Workday, SAP, and then newer players like Rippling and Deal, which are raising rounds of funding each one after the other in order to gain customers. And they're also competing over the same number of customers. A lot of their employees also switch back and forth. So they've had a lot of beef with each other for years that has spilled into the public eye. And this is just the climax of that with accusations of, you know, deal implanting a spy into Rippling. And, you know, corporate warfare doesn't get more juicy than this. Right. It really doesn't. I mean, this honeypot operation is crazy. Imagine the rush that these Rippling execs must have gone through. You set up this fake Slack channel and you see them immediately kind of lurking around that. You can see the activity of this employee within Slack. And so they made a literal honeypot to ensnare and basically just catch the person in the act. And I do think that this tensions between Dillon Rippling, they've been playing out publicly way before this lawsuit. Last year, Rippling launched this marketing campaign that was a direct shot at

deal. It was a full custom-built snake game where it portrays deal as this greedy snake and it accuses them of charging higher fees. They also saw a deal sale director visited the site to check out the game. And then later, the CEO of Rippling posted that he had visited the site. Everyone kind of said, ah, you're kind of doxing this guy now. So this is like knock down, drag out battle because you are right. The HR space is so competitive because of all these legacy players. When times are good, there's enough HR to go around. But when times start to you know, get a little tighter, you start to see some of these more aggressive tactics because people just don't splurge on HR tech like they might in when times are better. So I do think that

there's so many layers to this feud and the fact that, you know, there's a spy involved now is just one of the juiciest corporate espionage cases that we've, we've ever talked about. Yesterday, 25,000 people crammed into the San Jose Sharks Arena and cheered wildly as a superstar put on a show. No, it wasn't because Connor McDavid was in town. because Jensen Huang, the CEO of NVIDIA, was giving the keynote speech of the Tech Giants' annual GTC conference. What was essentially a science fair for computer geeks in 2009 has blossomed to become what has been called the Super Bowl for AI, a week-long extravaganza whose growth mirrors the meteoric rise of Nvidia to the top of the tech food chain. Clad in his signature leather

jacket, Huang defended his company's role in the AI revolution and hyped up new families of chips that Nvidia would roll out in the coming years. Nvidia dominates the market for these chips, known as GPUs or graphics processing units, which have become a hotter commodity than a Trader Joe's tote as tech companies hoover them up to train ever-powerful large-language models. He also announced a partnership with GM for self-driving cars and touted personal AI supercomputers that will allow developers and scientists to build AI models on desktop. But Toby, we need to start with the biggest announcement of them all,

a partnership with Taco Bell, KFC, and Pizza Hut to roll out AI order taking. I don't know if that was the biggest announcement, as much as a cheesy gordita crunch, sounds delicious right now. Probably the biggest takeaways from yesterday's meandering two-hour speech for one. The next generation of chips are here. Jensen unveiled the Blackwell Ultra AI chip, which is just a step up from its existing Blackwell trip. He then unveiled the next generation of AI chips called Rubin. that's actually named after the astronomer who discovered dark matter, which is pretty cool. That Ruben chip will sport 3.3 times the computing performance of Blackwell Ultra chips.

So it's just a continual wave of, you know, upping performance, upping the capacity of these AI chips. And then, yeah, also a big theme was what the physical arena that Nvidia is stepping into. We talked about GM partnership to develop self-driving cars, but also Jensen says that the of robotics is here and they brought robots on stage. There's a partnership with Disney involved as well. So he's trying to lay out a vision of a future of AI interacting with the physical world. And yesterday it was a big unveiling of that vision. We do need to talk about the deep seek in the room, though.

Remember this Chinese AI startup revealed this model deep seek, which could do, which could compete with the chat GBTs of the world at the highest level of AI models with just a fraction amount of the computing powder required. That knocked off $600 billion of Nvidia's market cap, sent it into a big slump because you had investors thinking, oh, well, maybe AI companies don't need to spend so much money on Nvidia's chips, which they had been, which had propelled Nvidia to become the most valuable company in the world. What was Jensen's response to this?

He said, hey, I think DeepSeek is actually good for us because the type of inference and reasoning that powers the deep seek model and all these models going forward, actually requires more computation than we ever thought possible. He said the amount of computation we need as a result of agentic AI, which is this AI that powers agents, which we've talked about in the show, it's like they can do all these things autonomously for you, is easily 100 times more than we thought we needed this time last year. So he's bullish, obviously, because he is the CEO of Nvidia, that companies will continue to spend and up their, and even up their spending on NVIDIA chips to power this new type of AI model.

Yeah, if we had to break down that speech into two things. One, he was reassuring people that AI will deliver on its potential stuff like how AI systems are providing value to people right now. But then also, he dwelt on some of those futuristic uses of AI too, which is stuff like the human size robots that can walk, pick up things, and the self-driving cars. So, yeah, part of it was like therapy session for the whole industry saying we're fine. We're still going to need, These chips are still very much necessary to train models, even if they are cheaper, like, deep-sea kind of revealed. But then also, look at the future, like a lot of cool stuff coming down the pipeline.

Up next, why tennis players are not happy with the current state of the tour. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the unreal college deal, everything you need to study and play with select Windows 11 PCs. students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last, ends June 30th, terms at AKA.m.m.m.m.com slash college PC.

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Please gamble responsibly. Monopoly is a trademark of Hasbro. Hasbro is not a sponsor of this promotion. If you were to guess what the most common complaint of professional tennis players was, you might think it would be bogus line calls or how challengers portrayed the sport. But more than likely, you'll hear something along the lines of, we play way too dang much. The tennis schedule runs 11 months of the year, and it's been a huge source of headaches for top players for years, among other working condition complaints.

Enter professional tennis's live golf moment. Remember Liv, the Saudi-backed breakaway golf tour that lured top players with the promise of bigger prize pools and smaller schedules, while a group of pro tennis players, led by Novak Djokovic, is escalating the fight against the existing men's and women's professional tours advocating for similar demands. Yesterday, the Professional Tennis Players Association, PTPA, brought legal action against the men's and women's tours, along with the International Tennis Federation, alleging that they were colluding to restrict players' earnings and were engaging in anti-competitive behavior. The PTPA is chasing player empowerment initiatives like reducing the grueling number of tournaments played, bringing consistency to tennis balls across tours, and fixing the insane scheduling that often leaves them playing well into the middle of the night. To add an insult to injury, tennis also gets minuscule prize payouts compared to other big sports like golf. Phenom Carlos Alcaraz recently joked, they are going to kill us in some way. And this suit from the PTPA is a step towards the future where top players don't need to make jokes like that, Neil. Yeah, let's break down the money earned by tennis players.

At the top of the line, you can make a lot of money. But in the middle and near the bottom of the order, you are just not making that much money at all. Let's go back to the top. The $10 million earned by number one tennis player at the time in 2022, Carlos Alcaraz was equal to the 200 and second player in the NFL and the 146th highest played player in the National Basketball League. Novak Djokovic, who is probably the goat of men's tennis. He's won 24 grand slam titles. His career prize money in tennis is $186 million.

Last year alone, last year alone, the number one goal. player, Scotty Sheffler, earned more than $62 million playing golf. That's about a third of Novak Djokovic, the best of all times, career winning. So these are just a few of the data points that these players are bringing to the table when they're accusing the ATP and the WTA suppress wages at the highest level of tennis. And I do think a difference between tennis and a lot of other North American Sports League is that those North American sports leagues have very powerful players unions in tennis. it's very splintered across many different tours,

international tennis federations involved as well. The Grand Slam tournaments are another thing altogether. So prize money isn't very standardized, and players kind of operate as these independent contractors. And as such, they get pretty bad working conditions. And again, I mean, take it all with a grain of salt. These are still professional athletes at the top of their field, but one of the co-founders of the PTPA was this Canadian tennis pro.

And he said, early on in my career, I've been very fortunate in my career, but I still had to sleep in my car while traveling to matches early on. And he goes, imagine. We saw that in Challenges. Right. Imagine the NFL player at the top of their league sleeping in their car at an away game. It would just never happen.

So they were trying to draw these parallels to other sports and saying, like, hey, our working conditions are not nearly what they should be given the demands put on our bodies and our, you know, travel schedule. And one of the accusations lobbed against these tours is that they suppress the prize money. And one example that the player cited was that in two. 2012 billionaire Larry Ellison, who owns the BNP Peribus Open, which more people know as Indian Wells, which just took place. He tried to increase the total prize money on that tournament that he owns by $1.6 million. He said the ATP and WTA rejected that proposal, saying it would put pressure on other

tour-sponsored tournaments to boost payout. So that is just one glaring example of. of these tours, you know, setting a price ceiling, which the players say violates antitrust action. And you talked about a lot of the other North American leagues having more rights and more strength with collective bargaining and free agency and things like that. Well, many of those things happened as a result of antitrust action, which is exactly what the, what the players in tennis are trying to do, should say that the ATP and WTA came out with a few statements.

They said they would vigorously defend the case. They talked about measures they had taken to increase payments to players, and they called the allegations baseless. Let's sprint to the finish with a few headlines. The UK has updated its basket of goods that are used to measure inflation, and yoga mats are in, and newspaper advertisements are out. Every year, the UK's Office of National Statistics makes tweaks to the 752 items it uses to calculate inflation, which provides a snapshot into changing consumer trends.

For example, Wild Rabbit was on the first list. in 1947, but no one really buys that anymore, so that's gone. So what are people buying now? This year, the ONS added yoga mats, virtual reality headsets, men's pool flip-flops, mango, and polds pork to the cost of living basket. The stuff they cut is from a bygone era, such as newspaper advertisements or oven-ready gammon, which is a type of cured ham that has dwindled in popularity. Toby, did they get it right?

I think so, although now I want to try an oven-ready gammon joint because we had never heard of that before this, but it looks delicious. I do think it kind of presents a snapshot of where the nation is heading. And right now it seems like very time-pressed nation, a very tech forward nation. The reason why they got rid of oven-ready gammon joints is because they take a lot longer to prepare. Pulled pork is something that is quicker. By the way, all the things they added sound like a heck of a party.

I mean, we're talking yoga mats, pool sliders. Virgilio reality headsets. Virtual reality headsets of pulled pork, toss a mango in there too. That sounds like a good time to me. So yes, this isn't a big deal. Like only 3% of the total basket of goods was actually affected by this. But every time these very niche, very specific goods come and go, like, it's fun to talk about. It's a time capsule.

It is a time capsule. Up next, Sherpas in Nepal are getting some Sherpas of their own as they lug goods up Mount Everest. Ahead of the main climbing season that begins in April, some expedition companies have been testing out drones that can carry loads of up to 35 pounds, even in the thin air of Everest. The use cases are attractive, including bringing back ladders used on climbing routes and waste disposal, which has become a huge issue as Everest has grown more popular. Being a Sherpa is a dangerous job as is, so having drones step up to help shoulder the load makes a lot of sense, especially for things like emergency supplies that can be transported from Base Camp 1 in 15 minutes rather than seven hours on foot. Seems smart, especially if they can make Sherpa's jobs safer.

It seems like a no-brainer, and you might be wondering. Why weren't they doing this before? Well, a drone from D.J.I, which is this Chinese company, the world leader in drones, it can cost more than $70,000. That is just a lot of money in a lower income country like Nepal. So they're trying to work out deals to make these things cheaper for Sherpas. But overall, this seems like a great solution in part to make this mountain safer as the climbing season gets underway next month. month. On Monday, West Virginia Governor Patrick Morrissey held a press conference to make a statement

about one of the biggest injustices in recent memory. Take a listen. Of the 111 brackets that were projected pertaining to North Carolina, UNC was only in 27 of them. This stinks at the highest level. Yes, that's right. The West Virginia governor used a press conference to make the case that his mountaineers deserved an NCAA tournament bid over the University of North Carolina, who controversially received a bid to March Madness while WVU was snubbed. Calling the NCAA the National Corrupt Athletic Association, Morrissey said he's asked his attorney general to investigate the organization to ensure the selection process is transparent and fair. Toby, does he have a point? I think he does. First of all, it was a little

shocking to hear a governor talking ball like this. He was going through quad one wins, just running down the resumes of both teams. But he has a point because there's real monetary stakes on the line. Teams earn units for each game they play in in the NCAA tournament, and each unit is worth approximately $2 million that gets paid out. So it's deprizing West Virginia of a game. You're depriving them of revenue as well. So, yes, I would be very mad as well.

And then, yeah, UNC's AD is the chair of the selection committee, and even though the selection committee came out and said, hey, he was not in the room during any deliberations involving UNC. A lot of people are saying, well, he was in the room for, deliberations involving WVU. So there's potentially a conflict of interest there. So yeah, to add insult to injury to Indiana just poached West Virginia's coach as well. So the hits keep coming for the Mountaineers.

Well, one thing we should mention is UNC played last night in, you know, the round of four to get into the actual bracket of 64 and they crushed. They dominated. Okay, let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful Wednesday. For any questions, comments, or feedback, send an email to Morning Brew Daily at MorningBrew.com. And if you're enjoying the show, share it with a friend, family member, or co-worker, or anyone else. Toby, who should everyone listening share it with today?

I want you to share the pod with a West Virginia fan. I am on your side, guys. You may have missed out on the NCAA tournament, but you got this pod instead. Seems like a fair consolation prize. Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer, Olivia Graham, and Olivia. Lake are our associate producers.

Yuchinawa Ogu is our technical director. Scoop's Dardaris is on audio. Is hair and makeup a spy from the daily? Hmm. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great, show today, Neil. Let's run it back tomorrow. If you used Babel, you would.

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