The cancellation of what would have been Google’s largest acquisition is expected to significantly affect the tech industry, particularly Microsoft. The search engine giant aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but on Tuesday, Wiz rejected the offer. CEO Assaf Rappaport stated that he made the difficult choice to decline the substantial offer to focus on growing Wiz towards $1 billion in annual revenue and preparing for an initial public offering (IPO).
This decision comes shortly after a major outage in the cybersecurity sector caused by CrowdStrike, a prominent industry player. In a research note after the announcement, Wedbush analyst Dan Ives attributed the deal’s collapse to investor concerns and antitrust issues surrounding Google, which has faced heightened scrutiny in recent years and recently concluded one of two significant trials brought by the Department of Justice.
Ives noted that the fallout from this deal may generate ripple effects throughout the industry. He anticipates that Google will continue to aggressively expand its cybersecurity initiatives in the wake of the failed acquisition, a sentiment likely shared with its competitor, Microsoft.
Ives mentioned that consolidation in the cybersecurity market is necessary, suggesting that Microsoft may pursue similar strategies to enhance its own security offerings in the next 12 to 18 months. Microsoft found itself in the spotlight recently, albeit for negative reasons, following a widespread IT outage linked to a faulty update of its cybersecurity software from CrowdStrike. This incident disrupted a range of operations globally, with users encountering the notorious “blue screens of death.”
While Ives maintains that CrowdStrike remains a leading name in cybersecurity, the outage might indicate that Microsoft should strengthen its cybersecurity capabilities, and Google’s abandoned acquisition further paves the way for such developments.