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In recent years, the demand for application security tools and platforms has experienced a significant upsurge. This demand has been largely driven by the growing threat landscape, increasing reliance on digital technologies, and greater awareness of protecting confidential data. Businesses, across industry verticals, are prioritizing application security to safeguard their systems, reputation, and data. The increased focus on application security has not only resulted in higher investment in the space but is also driving the merger and acquisition trend in the segment.
The global pandemic-led increasing adoption of cloud among businesses of all sizes has strained IBM’s organizational capacity to track certain aspects of their application frameworks. This has led to siloed data that is not actively tracked by IBM. The acquisition of Polar Security reflects IBM’s strategic focus on enhancing the discovery and organization of sensitive information. In addition to identifying where sensitive data is stored and what it is being used for, the solution offered by Polar Security will be also used for identifying potential issues in security policy, configurations, and data usage.
In another acquisition deal, Zscaler announced the acquisition of Canonic Security, another Israel-based application security platform provider. With this acquisition, announced in February 2023, Zscaler aims to prevent growing risks of SaaS supply chain attacks. The integration of Canonic Security’s supply chain security capabilities into the data protection services of Zscaler will strengthen Zscaler’s CASB and SSPM offerings.
The integration, on the other hand, will offer businesses more visibility while they are adopting hundreds of SaaS platforms. Moreover, robust application security measures will provide businesses with protection against potentially risky third-party applications and browser extensions.
Like IBM and Polar Security deal, the financial details of the Zscaler and Canonic Security are also not disclosed. However, both of these acquisition deals indicate an emerging trend, which picked up pace in 2022. Businesses are losing millions of dollars due to growing cyber threats, and as a result, providers are seeking to better their product offerings to garner more interest in their services from businesses.
Going forward, as cyberattacks become more sophisticated and more businesses emphasizes the importance of application security, the trend of mergers and acquisition is expected to further grow in 2023. The growing presence of innovative startups in the segment will keep presenting buyout opportunities to bigger players in the segment, who are seeking to consolidate their position in the industry. The funding winter amid the current macroeconomic environment has also meant that these buyout opportunities are available at reasonable valuations.
From the short to medium-term perspective, the application security market is projected to record strong growth, as businesses continue to go digital ever since the pandemic outbreak. This trend is expected to further continue over the next three to four years, and as a result, TechInsight360 maintains a robust growth outlook for the industry.
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