Wiz’s decision to walk away from a potential acquisition by Google could significantly impact Microsoft and the broader tech industry. Google had planned to acquire the Israeli cybersecurity firm Wiz for $23 billion, but Wiz CEO Assaf Rappaport announced the rejection of this offer on Tuesday. Rappaport stated that the decision was challenging but necessary for Wiz to focus on achieving $1 billion in annual revenue and preparing for an initial public offering (IPO).
This acquisition would have strengthened Google’s cybersecurity division, particularly following a major outage caused by CrowdStrike, which raised concerns in the cybersecurity landscape. Wedbush analyst Dan Ives noted that investor apprehensions and ongoing antitrust challenges were key factors in the deal’s collapse. Google has been under significant antitrust scrutiny and recently concluded its trial in one of the two major cases brought by the Department of Justice.
Ives highlighted that the failure of this deal could have widespread consequences in the tech sector. He anticipates that Google will continue to invest in expanding its cybersecurity capabilities, a strategy that Microsoft may also pursue. Ives suggested that the cybersecurity industry is ripe for consolidation, and Microsoft might seek to enhance its own cybersecurity offerings in the next 12 to 18 months.
The urgency for Microsoft to strengthen its cybersecurity stance has been underscored by the global IT outage linked to a flawed update from CrowdStrike, which uses Microsoft’s systems to thwart cyber threats. This incident prompted numerous reports of critical failures, affecting businesses and government operations worldwide. While Ives considers CrowdStrike as maintaining its status as a leading cybersecurity provider, the recent outage indicates a necessity for Microsoft to improve its cybersecurity measures, especially following Google’s failed acquisition attempt.