Wiz’s decision to back out of a significant acquisition by Google may have profound effects on the tech sector, particularly for Microsoft.
The tech giant had planned to acquire Israeli cybersecurity company Wiz for $23 billion, but Wiz’s CEO Assaf Rappaport recently announced the difficult decision to decline the offer. Rappaport stated that the choice was made to focus on growing the company toward an annual revenue target of $1 billion and preparing for an initial public offering (IPO).
Had the deal gone through, it would have strengthened Google’s cybersecurity portfolio, especially in light of a recent major outage experienced by CrowdStrike, a key player in the industry. According to Wedbush analyst Dan Ives, factors such as investor apprehension and ongoing antitrust scrutiny contributed to the collapse of the acquisition. Google has faced substantial antitrust challenges recently and has just concluded one of its major trials with the Department of Justice.
Ives noted in a communication to investors that the failure of this deal is likely to lead to significant ramifications throughout the cybersecurity landscape. He suggested that Google will still focus on enhancing its cybersecurity offerings despite the setback, a strategy likely mirrored by Microsoft.
Ives expressed belief in the need for consolidation in the cybersecurity space and anticipated that Microsoft may take steps to strengthen its own cybersecurity capabilities in the coming 12 to 18 months. This follows a recent incident that placed Microsoft under scrutiny after a widespread IT outage linked to a faulty update from CrowdStrike, which is utilized by Microsoft’s Windows to protect its systems. The outage caused disruptions across various sectors, including businesses, airports, and government services.
While Ives continues to regard CrowdStrike as a leader in cybersecurity, the recent outage highlights the necessity for Microsoft to enhance its cybersecurity measures, a path that may be further encouraged by Google’s abandoned acquisition attempt.