Wiz’s decision to withdraw from the proposed acquisition by Google could have significant consequences for Microsoft and the broader tech landscape.
Google had aimed to purchase the Israeli cybersecurity startup Wiz for $23 billion, but Wiz CEO Assaf Rappaport announced on Tuesday that the company would not accept the offer. Rappaport explained that the difficult choice was made to focus on establishing Wiz as a billion-dollar revenue business and prepare for an eventual IPO.
This acquisition would have strengthened Google’s cybersecurity division, particularly following a major disruption in the industry caused by CrowdStrike last week. Dan Ives, an analyst at Wedbush, noted that concerns from investors and antitrust issues played a role in derailing the deal. Google has faced increased antitrust scrutiny in recent years and has just concluded a trial related to these matters.
Ives mentioned in a communication to investors that the cancellation of this acquisition could create ripples across the tech sector. He expects Google to persist in its efforts to enhance its cybersecurity presence, similar to Microsoft’s intentions.
He suggested that the cybersecurity sector is due for consolidation and indicated that Microsoft is likely to pursue opportunities to strengthen its cybersecurity offerings in the coming year to 18 months.
The urgency for Microsoft to improve its cybersecurity capabilities was underscored by a recent global IT outage linked to a problematic update from CrowdStrike, which impacted business operations, travel, and government services worldwide. Despite the setback, Ives maintains that CrowdStrike remains a leading name in cybersecurity. However, this incident highlights the critical need for Microsoft to bolster its own cybersecurity framework, a necessity that has been amplified by Google’s abandoned acquisition of Wiz.