Google’s potential $23 billion acquisition of Israeli cybersecurity startup Wiz has fallen through, a decision that carries significant ramifications for the tech sector, notably for Microsoft. Wiz CEO Assaf Rappaport announced the rejection of Google’s offer on Tuesday, citing the intention to focus on building the company toward achieving $1 billion in annual revenue and pursuing an initial public offering (IPO).
This acquisition would have strengthened Google’s cybersecurity division, especially following a substantial service disruption caused by CrowdStrike, a major player in the cybersecurity field, just days earlier. Wedbush analyst Dan Ives noted in his research that investor apprehensions and ongoing antitrust challenges contributed to the deal’s collapse. Google has faced increasing scrutiny regarding its market practices and recently concluded a trial pertaining to one of two key cases brought forth by the Department of Justice.
Ives highlighted that the failure of the acquisition could have wide-ranging effects in the industry and anticipates that Google will continue to enhance its cybersecurity initiatives in light of this setback, as will Microsoft.
He emphasized that the cybersecurity sector is ripe for consolidation and predicted that Microsoft might pursue similar strategies to strengthen its cybersecurity offerings in the next 12 to 18 months. This follows a troubling incident where a faulty update to CrowdStrike’s software resulted in a significant global IT outage, adversely affecting Microsoft users who reported serious issues, including the notorious “blue screen of death.”
Though Ives described CrowdStrike as retaining its status as the “gold standard” in cybersecurity, the recent outage underscores the necessity for Microsoft to enhance its cybersecurity capabilities, a need further emphasized by Google’s abandoned acquisition bid.