Report: Microsoft Adds Cloud Security Talent With $320 Million Acquisition Of Startup Adallom

Microsoft has agreed to acquire Adallom, an Israel-based startup that provides security for cloud applications, in an all-cash deal of around $320 million, The Wall Street Journal reported Monday.

Adallom, which emerged from stealth in 2013, sells a cloud auditing service that continually monitors cloud apps in order to pinpoint and prevent suspicious behavior. The startup does this using a proprietary heuristics engine and with threat analysis from an internal team of security researchers.

Adallom has technology partnerships with Microsoft, Google, Amazon Web Services, Salesforce.com, SAP and Hewlett-Packard, among others.

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Microsoft wasn't immediately available for comment. A spokesman for Adallom, which has its U.S. headquarters in Palo Alto, Calif., declined comment.

Andrew Plato, president of Anitian, a Beaverton, Ore.-based security consultancy, sees Adallom as a "logical" acquisition that fits with Microsoft's ongoing efforts to boost security in its cloud services.

"They want to position Azure as the 'sensible business cloud' service with integrated security, and they are lagging behind Amazon Web Service in many ways there," Plato told CRN.

Microsoft debuted its Advanced Threat Analytics software in May, which uses heuristics and file analysis to identify situations where Active Directory is being used in an unauthorized way. It uses technology from Microsoft's acquisition of Israel-based security startup Aorato last year.

One source close to Adallom described the deal as an "acqui-hire" that will boost threat intelligence for Microsoft's Azure Active Directory offering, which handles identity and access management for cloud apps.

"This is a targeted deal: Microsoft just managed to get golden handcuffs on 75 of the best security researchers in Israel," said the source, who didn't want to be named because he's not authorized to comment on the matter.

Adallom launched a partner program in January with back-end rebates and incentives to attract security consultancies, and resellers to sell its products. Given that Microsoft is also a channel-focused vendor, the source said it's unlikely that the software giant will significantly alter Adallom's go-to-market approach.

PUBLISHED JULY 20, 2015