F5 Buys Shape for $1B to Dominate Application Security

F5 Networks today said it will acquire fraud prevention company Shape Security for $1 billion in a deal that CEO and President François Locoh-Donou said “changes the game in application security.” F5 Networks today said it will acquire fraud prevention company Shape Security for $1 billion in a deal that CEO and President François Locoh-Donou said “changes the game in application security.” It will also more than double F5’s addressable application security market “from $4 billion to more than $8 billion,” he said on a conference call with investors. The combination of F5 and Shape “creates the world’s first true application security leader,” he added. This is F5’s largest acquisition to date and its second this year. Earlier this year it paid $670 million for DevOps company Nginx. Shape boasts that it protects more accounts from fraud than everyone else combined. Its customers include large banks, airlines, retailers, and government agencies. It protects these organizations from 1 billion automated attacks against applications every day, and also protects 150 million legitimate human transactions a day, Locoh-Donou said. Shape’s platform uses artificial intelligence (AI), machine learning, and cloud-based analytics to protect against bots, stuffing attacks — where cybercriminals use stolen passwords from third-party data breaches to take over other online accounts — and other attacks that can typically bypass online security and fraud controls. The Santa Clara, California-based company was founded in 2011 and has raised $183 million to date. F5 wanted to get into the anti-fraud market, and in addition to looking at other fraud prevention companies it considered buying a content-delivery network (CDN) vendor, Locoh-Donou said. “The one area Shape lacked — ease of insertion into traffic flows — is immediately remedied by the combination with F5 and Nginx because of our ubiquitous position in the flow of traffic,” he added. “In contrast to Shape, CDN vendors do not have nearly the same technical anti-fraud capabilities despite having an established presence. Likewise, smaller pure-play vendors fall short. They are generally less developed and not nearly as robust a Shape.” The acquisition also advances F5’s goal of becoming a leader in multi-cloud application services. “Shape’s analytics engine accelerates our plans to offer AI-enhanced application services to customers that give them better visibility, management, and orchestration across their applications, no matter where those applications live,” Locoh-Donou said. “Using Shape’s analytics engine we will provide real-time visibility into application health and performance, unique insights into application usage and customer experience, and more efficient and effective application orchestration. And we will do this across the entire F5 and Nginx portfolio.” Nginx, which F5 bought in March, developed an open-source web server for multi-cloud architecture that powers more than 374 million websites, including many of the most popular sites online today.