Microsoft to buy Israeli security firm Hexadite, sources say for $100M

Yet more activity in the world of cybersecurity. Microsoft today confirmed that it will acquire Hexadite, an Israeli startup that uses AI to identify and protect against attacks. We and others reported last month that this deal was in the works, for a price sources tell us is $100 million.

The idea is to expand Microsoft’s existing security portfolio with an infusion of new technology based around new innovations in areas like AI and machine learning. “Our vision is to deliver a new generation of security capabilities that helps our customers protect, detect and respond to the constantly evolving and ever-changing cyberthreat landscape,” said Terry Myerson, executive vice president, Windows and Devices Group, Microsoft, in a statement.

“Hexadite’s technology and talent will augment our existing capabilities and enable our ability to add new tools and services to Microsoft’s robust enterprise security offerings.”

Microsoft said that when the deal closes, Hexadite will be folded into work it does to develop security solutions for commercial Windows 10 customers, specifically with Windows Defender Advanced Threat Protection (WDATP). “With Hexadite, WDATP will include endpoint security automated remediation, while continuing the incredible growth in activations of WDATP, which now protects almost 2 million devices,” Microsoft notes.

Other security acquisitions Microsoft has made in Israel include AoratoAdallom and Secure Islands.

More generally, Hexadite’s tech and Microsoft’s interest in it are part of a bigger, new trend in security: legacy services are no longer fit for purpose in the new era of increasingly sophisticated malicious attacks, so enterprises are now spending to update their systems to better protect their networks.

Hexadite is part of what you might call that new guard of security companies, building solutions based on machine learning and AI modelled on “top cyber analysts” to try to tackle threats more like the smartest humans would. Other startups using AI to tackle security threats include Crowdstrike, which raised a large round of funding last month at a billion-dollar valuation; Cylance, also valued at more than $1 billion; and Harvest AI, which, as we reported, Amazon quietly acquired last year.

As we’ve noted before, what Hexadite does is provide a security remediation system: it identifies and stops smaller issues itself, and at the same time it weeds out bigger problems that need to be addressed by in-person security teams. By doing this, it prevents those teams from being overwhelmed by the smaller items. It claims to reduce the time it takes to deal with security issues, as a result, by 95 percent.

Microsoft’s interest in Hexadite — whose customers include Nuance, Telit and IDT — points to how security remains a hot area in the world of technology and specifically enterprise IT.

The rapid growth of connected services and devices has gone hand-in-hand with a rapid rise in cybercrime, with malicious hackers becoming increasingly rampant and sophisticated in their attacks on networks and the hardware and apps that run on them, with breaches leading to millions of dollars in costs and lots of stress.

This has led to an increasingly sophisticated landscape for security services, with companies covering every aspect of how we conduct business today and a huge amount of spending by organizations to try to prevent, stop, fix or mitigate damage. IDC estimates that enterprises will spend nearly $82 billion on security software this year.

Hexadite had raised $10.5 million in funding, according to Crunchbase, with investors including HP Ventures, YL Ventures, TenEleven Ventures and Moshe Lichtman of Israel Venture Partners. As we pointed out before, Lichtman is a 10-year veteran of Microsoft, which could point to one connection between the startup and its acquirer. Hexadite’s last round, of $8 million, was raised last year.