Wiz’s decision to back out of a potential acquisition by Google, valued at $23 billion, could have significant repercussions for the tech industry, particularly for Microsoft. The Israeli cybersecurity startup decided to reject Google’s offer solely to focus on its goal of achieving $1 billion in annual revenue and preparing for an IPO, according to CEO Assaf Rappaport.
This acquisition would have strengthened Google’s cybersecurity division during a tumultuous period marked by a major outage from CrowdStrike, a key player in the cybersecurity sector. Analyst Dan Ives from Wedbush noted in a research memo that investor worries and ongoing antitrust issues were factors that contributed to the collapse of the deal. Google has faced increasing scrutiny from antitrust regulators and has recently concluded one of two major lawsuits initiated by the Department of Justice.
Ives expressed in an email to investors that the failed acquisition could create ripple effects throughout the cybersecurity industry. He predicted that, despite this setback, Google would continue to enhance its cybersecurity capabilities, a trend likely mirrored by Microsoft as well.
Ives pointed out that consolidation in the cybersecurity sector is necessary, and he expects Microsoft to consider strengthening its cybersecurity offerings over the next year to year and a half. This comes after Microsoft faced backlash during a widespread IT outage caused by a faulty update in CrowdStrike’s cybersecurity software. Users reported problems such as “blue screens of death,” while the outage affected various sectors, including businesses and government operations.
Though Ives still regards CrowdStrike as the leading name in cybersecurity, the incident suggests that Microsoft could benefit from bolstering its cybersecurity posture, especially with Google’s failed acquisition creating opportunities for growth in the sector.