Microsoft Invests in Rubrik, Partners to Protect Customers from Ransomware

Microsoft Corp. is investing in software startup Rubrik Inc. and the two companies will combine on products that will help customers hit by ransomware recover their critical data without paying hackers.

The companies declined to specify the size of the investment. The funding totaled in the low tens of millions and valued Rubrik at about $4 billion, according to a person familiar with the matter, who asked not to be identified discussing private terms. Rubrik was started with the idea of modernizing the market for data-backup software, taking on a previous generation of vendors like EMC, now part of Dell Technologies Inc., and Veritas, now owned by the Carlyle Group.

The two companies will jointly sell software based on Microsoft’s Azure cloud to prevent, find and recover from ransomware attacks. The products also make sure backup copies of customer data and cloud software haven’t been compromised by the hackers, said Rubrik Chief Executive Officer and Co-Founder Bipul Sinha. The companies currently share 2,000 customers.

“When an attacker tells you they have control to the keys to your data and you can’t get it back without paying a ransom, this allows us to have an alternative source for that data in real-time to be able to bring that company back to operational control,” Tyler Bryson, a Microsoft vice president, said in an interview. “There’s a lot of backup solutions out there, but even those are vulnerable to having been compromised. If you didn’t design with the modern cloud architecture in mind, you may find you’ve just recovered to something already compromised.”

A spate of damaging ransomware attacks has occurred this year in which a hacker takes over networks and demands payment in order for a company or government agency to regain its data and control of its systems. In July, Miami-based Kaseya Ltd. was targeted. Because Kaseya provides software to managed service providers, who in turn offer information technology services to small- and medium-sized companies, the attackers were able to spread the infection to 1,500 businesses. The notorious ransomware gang REvil claimed credit and asked for $70 million to unlock the computers it infected. The attack followed others against Colonial Pipeline Co. and meatpacker JBS SA.

Ransomware attacks have accelerated during the pandemic as more companies use the cloud and their own corporate networks to deal with workforces split between home and an office, Sinha said. Microsoft and Rubrik have been working on combined products for a few years, but the need has become more critical.

“If somebody makes a mistake like clicking on an offer for a free cruise and ransomware gets in, we have the full assessment and mitigation solution,” he said. “What we are saying is you don’t have to pay the bad guys.”

Rubrik, founded in 2014, has raised a total of $553 million. The company’s last funding round was in 2019 at a valuation of $3.3 billion. Among the early investors was Microsoft board member and former chairman John Thompson. Thompson is also a Rubrik director.