Microsoft Reportedly Buys Cloud Security Firm Adallom for $320 Million

The company snaps up the cloud security and risk management specialist in a deal that ranks as its biggest Israeli acquisition, according to reports.

cloud security

Microsoft is doubling down on its cloud-first product strategy. The Redmond, Wash., software maker has acquired Adallom, a cloud security startup, for approximately $320 million, according to a July 19 report from Globes, an Israeli business news organization.

While Adallom lists a Palo Alto, Calif., address as its headquarters, the company's research and development activities are based in Tel Aviv, Israel. Founders CEO Adam Rappaport, CTO Ami Luttwak and Roy Reznik, vice president of research and development, all hail from the Israel Defense Forces elite tech units, according to the report.

If the acquisition along with its $320 million price tag is confirmed, it will mark the biggest Israeli tech buy from the software giant. When asked to confirm the deal, a Microsoft spokesperson declined to comment.

On April 14, Adallom announced it had raised $30 million in a round of funding backed by Hewlett Packard Ventures, Rembrandt Venture Partners, Sequoia Capital and Index Ventures. A week later at this year's RSA Conference in San Francisco, HP announced it was integrating Adallom's technology into its Cloud Access Security Protection Platform. Founded in 2012, the company has raised $49.5 million to date.

Adallom's platform employs an advanced heuristics engine and insights from its own labs to provide secure access to cloud applications and third-party software-as-a-service (SaaS) providers, including Salesforce, Google Apps, ServiceNow, Ariba, Box, Dropbox and Microsoft Office 365. The company touts that it has been able to thwart a new generation of cloud-aware threats, including a variant of the Zeus malware that targeted Salesforce and a vulnerability that made it possible to hijack Office 365 identity tokens.

It's not the first time Microsoft has looked to Israel's tech sector to boost its cloud security capabilities.

In November, the company announced it had acquired Aorato, an Active Directory security specialist based in Herzelia, Israel. Although the companies did not disclose the financial terms of the deal, reports pegged the transaction's worth at roughly $200 million.

In keeping with Microsoft's cloud focus of late, Takeshi Numoto, corporate vice president of Microsoft Cloud and Enterprise Marketing, said at the time that the Aorato's tech would help bolster the company's efforts to usher enterprises into the hybrid-cloud era.

"We are making this acquisition to give customers a new level of protection against threats through better visibility into their identity infrastructure," said Numoto in a statement. "With Aorato, we will accelerate our ability to give customers powerful identity and access solutions that span on-premises and the cloud, which is central to our overall hybrid cloud strategy."

Two months later, Microsoft snapped up another Israeli firm, this time Equivio, a Rosh Ha'Ayin-based e-discovery specialist that provides software to U.S. federal agencies, hundreds of law firms and other security-conscious organizations. Microsoft reportedly paid just under $200 million to acquire the company and its tech.

"Microsoft is serious about providing customers with tools to manage the legal and compliance requirements that are key to responsible business practices," commented Rajesh Jha, corporate vice president of Microsoft Outlook and Office 365, in a Jan. 20 announcement. "Office 365 includes robust eDiscovery and information governance capabilities today, and we'll use Equivio's machine learning technology to make these vital tools even more intelligent and easy to use in the months ahead."

Pedro Hernandez

Pedro Hernandez

Pedro Hernandez is a contributor to eWEEK and the IT Business Edge Network, the network for technology professionals. Previously, he served as a managing editor for the network of...