In recent years, the number of various online services that enterprises have to tap into has proliferated, which has created a market for cloud-based enterprise identity management to help manage, coordinate, and integrate all of those services with a single sign-on (SSO). There's even yet another "-aaS" acronym in use: identity as a service (IDaaS). Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary Google just made a big move in IDaaS with its purchase of Bitium, which was announced yesterday.
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The deal will bolster Google's existing Cloud Identity service, which will offer enterprise customers identity and access management (IAM) and SSO. Bitium, a IDaaS start-up that was founded five years ago, supports a plethora of third-party app integrations including Google Apps, Microsoft (NASDAQ: MSFT) Office 365, customer relationship management (CRM) platforms like salesforce.com, and more, while maintaining security.
Expanding Google Cloud Identity's support to a greater number of third-party services will broaden its appeal and make it more competitive with rival offerings like Microsoft's Azure Active Directory and Amazon.com's Amazon Web Services (AWS) IAM service. No financial details were disclosed.
Bitium co-founders Scott Kriz and Erik Gustavson vowed to continue supporting all current customers as Bitium transitions into the Google Cloud team.
What about Okta?
It's also something of a double-edged sword for Okta (NASDAQ: OKTA), which announced an expanded partnership with Google last year that named Okta a "preferred partner" for large-scale enterprise deployments of Google Apps. The company subsequently went public earlier this year.
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On one hand, Google scooping up Bitium serves as validation of how important the IDaaS market is becoming, but on the other, it suggests that Google may be more interested in competing with Okta. Okta is three years older than Bitium, founded in 2009 by former Salesforce.com exec Todd McKinnon.
For what it's worth, Google says it will "continue to work closely" with its broader ecosystem of identity partners in order to offer choices for enterprise customers. Okta is a top dog in the IDaaS space, the only vendor that Gartner has named a leader in its Magic Quadrant for IDaaS for three years running.
It's possible that Okta was a candidate on Google's shopping list, but the price tag would have been hard to justify. Okta currently has a market cap of $2.8 billion before factoring in any acquisition premium, and Google just spent $1.1 billion on acquiring HTC's Pixel team. It's already been a pretty expensive month for the search giant.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Evan Niu, CFA owns shares of Okta, Inc. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), AMZN, and IT. The Motley Fool recommends CRM. The Motley Fool has a disclosure policy.