Google’s plans for what would have been its largest acquisition have fallen through, a development that could significantly affect the tech landscape, particularly for Microsoft.
The tech giant aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but Wiz’s CEO, Assaf Rappaport, announced on Tuesday that the company has opted to decline the offer. Rappaport cited the desire to continue developing Wiz towards its goal of achieving $1 billion in annual revenue and preparing for an initial public offering as key reasons for the decision.
This acquisition would have strengthened Google’s cybersecurity division at a time when the industry was reeling from a major outage linked to CrowdStrike, an industry leader, that occurred late last week. Analyst Dan Ives of Wedbush noted in a research report that investor anxieties and ongoing antitrust challenges contributed to the deal’s breakdown. Google has faced considerable antitrust scrutiny in recent years and recently concluded one of two significant cases with the Department of Justice.
Ives pointed out that the failure of this acquisition is likely to have far-reaching consequences for the sector. He believes Google will remain committed to enhancing its cybersecurity capabilities despite the loss of the Wiz opportunity, a sentiment echoed with respect to Microsoft.
Ives suggested that consolidation within the cybersecurity industry is overdue and anticipated that Microsoft might seek to strengthen its cybersecurity platform in the next 12 to 18 months.
The context of this situation is further complicated by a significant global IT outage caused by a flawed update to CrowdStrike’s cybersecurity software last Friday, which has drawn negative attention toward Microsoft. Users of Microsoft’s systems, relying on CrowdStrike for threat prevention, experienced disruptions, leading to widespread issues for businesses, flights, and government activities.
Although Ives maintains that CrowdStrike remains the “gold standard” in cybersecurity, the recent outage underscores the need for Microsoft to expand its cybersecurity initiatives, a need that Google’s unsuccessful acquisition only amplifies.