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Why is Microsoft Buying CyberX Israeli for $ 170 Million?

This is the fifth Israeli cyber company to purchase the tech giant in recent years

A few days after Intel’s acquisition of Mobit – another signaling acquisition of an Israeli startup by technology giant: Microsoft will acquire Israeli startup CyberX, which develops industrial control system (IIoT) protection system. This is just a few months ago, the company announced integration with Azure Security Center, Microsoft’s IoT environment protection platform. It is estimated that the amount of the deal is estimated at $ 170 million, more than three times the total investment in the company at $ 48 million.

Protects industrial networks so that the damage is not serious

The CyberX (Cyber-X) platform is capable of providing insights in less than an hour, enabling industrial network security teams to detect, stop, predict and, most of all, prevent critical infrastructure threats. Threats that can cause economic damage, and sometimes even physical damage, that can disable very important infrastructure activity. The solution monitors the network non-invasively and without end components, but using M2M analysis and algorithms that analyze network traffic. Thereby, the platform does not interfere with the industrial network activity itself.

CyberX was founded in 2013 by Omar Schneider and Nir Giller, graduates of the IDF Cyber Security Unit The company’s existing investors include Norwest Venture Partners, OurCrowd Flint Capital, Qualcomm’s investment arm. The company’s latest fundraiser was completed a year ago, when it raised $ 18 million.

CyberX investors are expected to enjoy substantial profits, as stated: Norwest Venture Partners holds about 22% of the company’s shares, Glilot Capital Partners holds 19.5% of its shares and Flint Capital holds about 13%. They also invested in OurCrowd, Inven Capital, Qualcomm Ventures and more.

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Interpretation: New product for Microsoft cloud users

CyberX’s upcoming acquisition will be Microsoft’s 20th acquisition of Israeli startups in the last 20 years. However, if you look at the past few years, you can see how Microsoft’s emphasis has shifted to acquiring Israeli information security companies.

In 2014, Microsoft acquired Aorato, which developed a product that monitors, analyzes, and blocks suspicious behaviors in organizations; Then, in 2015, she bought Jerusalem Secure Islands for $ 150 million; And then Microsoft made one of its most prominent acquisitions – the Adallom acquisition. Microsoft then paid $ 320 million for the cyber company, which eventually also provided it to those who would soon become Microsoft Director of Microsoft’s R&D Center in Israel, Assaf Rappaport. Two years later, Microsoft opened its wallet again and renewed it with another Israeli cyber company: Hexadite for $ 100 million.

One of the worrying trends in recent years is the focus of attackers on IoT systems and industrial control systems. These are, among other things, old systems that are found, for example, in infrastructure facilities, energy plants and factories, and are based on an old computing infrastructure. As a result, the systems are very vulnerable to outside attacks by various players including states attackers. The desire of companies and organizations to monitor the various facilities 24 hours a day 7 days a week, including remote control – all allow attackers to reach systems that were once disconnected from the Internet and the outside world. According to a study by Palo Alto Networks, about 98% of all communications with different IoT systems are unencrypted. In addition, 33 percent of the systems are vulnerable to damage, 41 percent of the systems have various security breaches and about a quarter of the systems are vulnerable due to the human factor.

There are quite a few companies that have this Bacter activity, including Claroty from Team8 Israeli, Dragos, NextDefense and Indegy, which was recently sold to US Tenable for $ 78 million. After the acquisition is complete, Microsoft will be able to embed CyberX’s capabilities and offer Azure customers, its cloud platform, another layer of industrial infrastructure protection.

Also published on Medium.

Published inCloud
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