Google’s ambition for what would have been its largest acquisition has come to a halt, leading to significant implications for the tech industry, particularly for Microsoft.
The tech giant had aimed to acquire Israeli cybersecurity startup Wiz for $23 billion. However, Wiz CEO Assaf Rappaport announced on Tuesday that they would not proceed with the offer. Rappaport described the decision as “tough,” emphasizing the company’s focus on achieving $1 billion in annual revenue and preparing for an IPO.
This acquisition would have strengthened Google’s cybersecurity division, especially following a major outage last week attributed to CrowdStrike, a leader in the industry. Wedbush analyst Dan Ives suggested that investor apprehensions and concerns regarding antitrust regulations played a role in the deal’s collapse. Google has faced significant scrutiny from antitrust regulators and recently concluded a trial linked to a major case from the Department of Justice.
Ives noted in a communication to investors that the failed acquisition would have broader repercussions in the cybersecurity sector. He anticipates that Google will persist in enhancing its cybersecurity capabilities despite the setback with Wiz, a strategy likely to be mirrored by its competitor, Microsoft.
Ives believes that consolidation is essential in the cybersecurity industry and expects Microsoft to explore options to strengthen its own cybersecurity platform over the next year or so. The company faced negative attention recently due to a global IT outage related to a faulty update from CrowdStrike, which affected numerous users and operations worldwide.
Though Ives maintains that CrowdStrike remains the “gold standard” in cybersecurity, the recent outage may signal a need for Microsoft to bolster its cybersecurity resources, and the collapse of Google’s proposed deal may further propel these developments.