Wiz’s decision to reject Google’s acquisition offer may have significant repercussions for Microsoft and the tech sector as a whole.
Google had aimed to acquire the Israeli cybersecurity startup Wiz for $23 billion, but the deal fell through on Tuesday. Wiz CEO Assaf Rappaport explained that turning down such a substantial offer was a difficult but necessary choice, allowing the company to focus on achieving $1 billion in annual revenue and preparing for an initial public offering (IPO).
This acquisition would have enhanced Google’s cybersecurity services, particularly after a major outage affecting CrowdStrike, a significant player in the industry, caused widespread disruptions last week. Dan Ives, an analyst at Wedbush, attributed the deal’s collapse to investor concerns and ongoing antitrust issues surrounding Google, which has faced considerable regulatory scrutiny in recent times, culminating in a trial concerning antitrust matters.
Ives noted that the failed agreement is likely to have broad implications for the sector. He suggested that Google will continue to invest in expanding its cybersecurity capabilities, a strategy that Microsoft may also adopt in the near future.
Ives remarked that there is a pressing need for consolidation within the cybersecurity industry and indicated that Microsoft might seek to enhance its own cybersecurity offerings over the next year to 18 months. This comes in the wake of Microsoft being criticized during a global IT outage caused by a problematic software update from CrowdStrike. The outage affected numerous users, who experienced significant disruptions across businesses, flights, and government services.
While Ives still regards CrowdStrike as the “gold standard” in cybersecurity, the recent incident may indicate a need for Microsoft to ramp up its cybersecurity efforts, particularly in light of the lapsed Wiz deal.