Wiz’s decision to withdraw from Google’s acquisition proposal could have significant repercussions for Microsoft, according to analysts.
Google had aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but the offer was declined on Tuesday. Wiz CEO Assaf Rappaport explained that the choice to reject the substantial offer was made in order to focus on achieving $1 billion in annual revenue and preparing for an initial public offering (IPO).
The acquisition would have expanded Google’s cybersecurity capabilities at a time when the industry was already facing challenges, specifically following a major outage from cybersecurity leader CrowdStrike last week. Wedbush analyst Dan Ives noted in a research memo following the news that concerns from investors and ongoing antitrust issues contributed to the collapse of the deal. Google has been under stringent antitrust examinations in recent years and recently concluded a trial related to one of two major cases brought by the Department of Justice.
Ives mentioned that the failure of the deal could lead to widespread effects across the sector. He anticipates that Google will continue to enhance its cybersecurity presence even without the Wiz acquisition and that Microsoft will follow suit.
Ives indicated that there is a pressing need for consolidation within the cybersecurity field, suggesting that Microsoft might pursue similar strategies to strengthen its cybersecurity platform in the next 12 to 18 months.
Microsoft’s own position has come under scrutiny following a significant global IT disruption caused by a flawed update to CrowdStrike’s cybersecurity software last Friday. This incident led to widespread reports of “blue screen” errors among Microsoft users globally, disrupting numerous businesses, flights, and government functions.
While Ives still regards CrowdStrike as the “gold standard” in cybersecurity, the outage underscores the need for Microsoft to enhance its cybersecurity infrastructure, and the failed Google-Wiz deal may further facilitate this opportunity.