Microsoft Acquires Israeli Startup Aorato for Reported $200 Million

Acquisition is first in Israel by U.S. software company in five years.

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The Microsoft logo is seen at their offices in Bucharest on March 20, 2013.
The Microsoft logo is seen at their offices in Bucharest on March 20, 2013.Credit: Reuters

Microsoft, the American software giant, said on Thursday it had acquired the Israeli enterprise startup Aorato for an undisclosed sum.

Sources said the acquisition, which had been rumored as early as last summer, was completed Wednesday night and that the American company paid $200 million. This acquisition is the first for Microsoft in Israel in five years, after it bought gesture-recognition start-up 3DV Systems Ltd. in 2009.

Aortato’s technology monitors a company’s main information architecture – called the active directory component – using machine learning to detect suspicious activity on the network. Its software builds a normal profile of all authorized users, enabling it to identify attempts to penetrate the network by unauthorized users or even unauthorized activities by employees.

Takeshi Numoto, the Microsoft corporate vice president for cloud and enterprise marketing who announced the acquisition in a blog, noted that Aorato’s software makes use of Microsoft’s Windows Server Active Directory. “Therefore, most of our enterprise customers should be able to easily take advantage of Aorato’s technology. This will complement similar capabilities that we have developed for Azure Active Directory, our cloud-based identity and access management solution,” Numoto said.

Based in Herzliya and employing just 19 people, Aorato was formed three years ago by the brothers Idan and Ohad Plotnik as well as Michael Dolinsky, all veterans of Israel Defense Forces technology units. Microsoft indicated that all of Aorato’s staff will become Microsoft employees.

The company only came out of “stealth” mode, making itself and its technology public, last January when it also announced it had raised $10 million of venture capital funding from investors led by Accel Partners and Innovation Endeavors. Other investors in the company include Israel-based Glilot Capital venture fund, and two of the founders of Trusteer, an information-security company bought in 2013 by IBM for $650 million. That round had valued the company at $30 million, meaning that its backers earned seven times their money in 11 months.

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