Google is in late stage discussions with Symphony regarding its plans to make an investment in the secure messaging startup, says a report from Re/code citing sources familiar with the talks. Terms of the investment or the size are not known yet. The announcement could come as soon as next week.
Google itself investing in Symphony
Symphony has built a cloud-based messaging service, and uses advanced encryption technology to keep the communications secure. Symphony is based in Palo Alto, California and has also offices in New York. The investment will come from Google proper, and not its investment arms – Google Ventures and Google Capital (Alphabet entities now) – the report says citing sources familiar with Google’s plans.
Google made a similar investment last year as well, when it invested $500 million in the secretive augmented-reality startup Magic Leap, but any investment in Symphony would probably be smaller. The Wall Street Journal was the first to report the investment, saying the deal will value Symphony at $650 million. There is no comment from Google and Symphony over the matter to date.
Google’s investment in symphony will follow an agreement between several large investment banks and the New York Department of Financial Services concerning the use of the product. Under the new terms of the arrangement, Symphony will be required to save messages for seven years. The DFS raised questions over Symphony’s encryption technology, and also whether the banks could use it to avoid scrutiny by regulators. As many as 15 large Wall Street banks and financial institutions are backing Symphony including Goldman Sachs, Bank of America, Merrill Lynch, Credit Suisse, J.P. Morgan and Citi.
Rising interest in financial products
Google will be the first investor in Symphony from outside the financial industry, and whether the company’s new CEO has a role in this can’t be said. In March, the company hired Ruth Porat as its CFO. Porat, a respected Morgan Stanley veteran, is expected to bring more transparency to a company that has shirked it historically. Porat holds office hours with investors, informing them about the finances of Google and Alphabet – its new holding parent.
Google has also shown interest in other financial products, including a payments service within its Gmail email service and a mortgage comparison offering that falls within the mainstream search product of Google.