Okta & Auth0

Okta will purchase Auth0 for $6.5B. Okta is a leading IDaaS vendor, originally focused on workforce but now addressing B2E, B2B, and B2C use cases. Okta’s solutions are designed for organizations that want to quickly enable cloud-delivered identity and seamlessly interoperate with other SaaS applications.

Auth0 had a different entry point into the realm of IAM. Auth0 was aimed at developers, both in functionality and their marketing approach. Auth0’s founders knew that this was an underserved market. Consider a case where a company needs to expose one or two major applications to consumers. They don’t think they need a full-blown Consumer IAM (CIAM) solution. They just want to wrap an identity layer around those applications and open them up for business. This is Auth0’s forte and what has driven their unicorn level success. Auth0 has been a pioneer in identity fabric architectures and a leading Identity API Platform.

On the other hand, Okta has both enterprises and SMBs as customers – those who want cloud-native, scalable, and interoperable solutions that are easy to deploy and maintain. Okta has integration, or out-of-the-box connectors, for many, many SaaS apps. For organizations moving to the cloud, they make it easy to take identity there as well.

Here are the strengths each has:

Okta and Auth0 have different origins and different approaches, but both have had great success in IAM. Though the stated price seems high, Okta will in time realize that their investment adds capabilities to their portfolio that will appeal to additional customer prospects, as well as add to their customer base.

Every major acquisition in IT brings the question of what happens to the purchased company and its technology. Auth0 will reportedly operate somewhat independently at first, while integration options are evaluated internally. In cases of large acquisitions in the past within this industry, some buyers make the move to pick up customers and market share only. The purchased product essentially disappears. In this case, given that Auth0’s go-to-market strategy and customer base are quite different from their own, Okta would fare best at integrating Auth0 technology and adding the GTM strategy to their own, rather than allowing those to disappear.

Though CIAM emerged from IAM as a result of evolving requirements, we are starting to see movement from both CIAM and IAM vendors toward offering more unified solutions, with an emphasis on cloud-delivered services. From a functionality combination perspective, this acquisition of Auth0 by Okta could be very good for customers. Time will tell how this pairing will work out.

This move reduces the number of large vendors in IAM markets such as IDaaS, CIAM, and Authentication Services. However, as we have seen in recent Leadership Compasses, there are new and regional vendors appearing to address emerging requirements in those specialties. For more information, see our very recent Leadership Compasses on Enterprise Authentication, Access Management, and CIAM Platforms.

KuppingerCole will follow this and other news in the IAM field. In fact, new reports covering vendors and cloud-delivered IAM services will soon be published.