The proposed acquisition of Israeli cybersecurity startup Wiz by Google for $23 billion has been abandoned, a decision that has significant implications for the technology sector, particularly for Microsoft. Wiz CEO Assaf Rappaport announced the rejection of Google’s offer, stating that he made the difficult choice in order to focus on growing the company towards a $1 billion annual revenue and preparing for an initial public offering (IPO).
The deal could have strengthened Google’s cybersecurity capabilities, especially in light of a recent major outage linked to CrowdStrike, a significant player in the industry. Wedbush analyst Dan Ives noted that concerns from investors and ongoing antitrust challenges contributed to the collapse of the acquisition. Google has faced increasing scrutiny over antitrust issues and recently concluded a trial related to one of two significant cases brought forth by the Department of Justice.
Ives expressed in an email to investors that the failure of this deal would likely have ripple effects throughout the sector. He suggested that Google would continue to intensify efforts to expand its cybersecurity portfolio, a direction that Microsoft is also expected to pursue. Ives forecasted that consolidation within the cybersecurity field is necessary and anticipated that Microsoft might seek to enhance its cybersecurity offerings in the coming year to 18 months.
Microsoft recently faced criticism due to a global IT outage linked to a problematic update of its cybersecurity software provided by CrowdStrike. This incident, which caused disruptions across various sectors including businesses and government operations, has raised concerns about the robustness of Microsoft’s cybersecurity measures. Despite Ives labeling CrowdStrike as the benchmark in cybersecurity, the outage highlights the need for Microsoft to strengthen its cybersecurity strategies, especially with the door now wide open following Google’s failed attempt to acquire Wiz.