Google’s intention to acquire Israeli cybersecurity startup Wiz for $23 billion has come to an end, a decision that could have significant ramifications for the technology sector, particularly for Microsoft.
Wiz CEO Assaf Rappaport announced on Tuesday that the company has rejected Google’s proposal, explaining that it was a “tough” decision made in the pursuit of striving for $1 billion in annual revenue and preparing for an initial public offering (IPO).
This acquisition would have strengthened Google’s presence in cybersecurity, especially following a recent outage affecting the industry, which was caused by CrowdStrike. Analyst Dan Ives from Wedbush noted that investor worries and ongoing antitrust issues contributed to the deal’s failure. Google has faced intense scrutiny concerning antitrust matters and recently concluded a trial related to one of two major cases brought by the Department of Justice.
Ives commented in an email to investors that the deal’s collapse would likely have ripple effects across the cybersecurity landscape. He anticipates that Google will continue to focus on expanding its cybersecurity capabilities, a sentiment echoed by Microsoft.
Ives added that, given the need for consolidation in the cybersecurity industry, Microsoft is expected to seek opportunities to enhance its own cybersecurity platform in the next 12 to 18 months.
Microsoft found itself under scrutiny during a recent widespread IT outage that resulted from an improper update to CrowdStrike’s cybersecurity software. This incident affected Microsoft users globally, leading to severe disruptions for businesses, flights, and government services.
While Ives maintains that CrowdStrike remains a leader in cybersecurity solutions, the recent outage emphasizes the need for Microsoft to strengthen its cybersecurity offerings, and the failure of Google’s acquisition could further encourage this trend.