The real reason Okta spent $6.5B on Auth0

Okta's acquisition of Auth0 for $6.5 billion in an all-stock deal represents a strategic move to enhance its product offerings in the customer identity space, which complements its core strength in workforce identity. Auth0's valuation increased significantly from $1.9 billion after its last private financing round, largely due to potential synergies and the expanded market opportunity for Okta, which now addresses a combined $55 billion market. The acquisition eliminates Auth0 as a competitor, enhancing Okta's pricing power, and combines Okta's top-down sales approach with Auth0's developer-first strategy. Despite the strategic benefits, the acquisition was met with mixed reactions from investors, users, and employees, with Okta's stock price dropping 10% post-announcement and concerns over Okta's developer support and corporate culture. Auth0 will operate as an independent unit within Okta, while the acquisition is expected to provide significant future revenue growth opportunities. The market dynamics have also opened opportunities for open-source alternatives like SuperTokens to fill niches left by the consolidation.