The recent withdrawal of Israeli cybersecurity startup Wiz from a $23 billion acquisition by Google is poised to have significant repercussions for the tech sector, particularly for Microsoft.
Wiz’s CEO, Assaf Rappaport, announced the difficult decision to reject the offer, choosing instead to focus on growing the company towards an annual revenue of $1 billion and preparing for an initial public offering. The acquisition would have enhanced Google’s cybersecurity capabilities, especially following a major outage last week caused by cybersecurity firm CrowdStrike, which impacted various sectors globally.
Wedbush analyst Dan Ives noted that the deal fell through due to investor concerns and ongoing antitrust challenges faced by Google, which is currently under intense scrutiny and recently concluded a trial related to two significant cases from the Department of Justice.
Ives expressed that the failure of the Wiz deal will likely have interconnected repercussions throughout the industry. He anticipates that Google will continue to aggressively pursue expansion in its cybersecurity operations, a trend that Microsoft is also expected to follow. Ives mentioned the need for consolidation in the cybersecurity industry, predicting that Microsoft will likely seek to enhance its cybersecurity platform in the next year or so.
Microsoft recently faced criticism during a widespread IT outage linked to a faulty update in its cybersecurity software from CrowdStrike, which disrupted operations for numerous users. Ives maintains that despite the incident, CrowdStrike remains a leading player in cybersecurity. However, the situation underscores the importance for Microsoft to strengthen its cybersecurity offerings, and the miss on the Wiz acquisition may further facilitate that focus.