Google’s attempt to acquire Israeli cybersecurity startup Wiz for $23 billion has fallen through, which could have significant ramifications for the technology sector, particularly for Microsoft.
Wiz CEO Assaf Rappaport announced on Tuesday that the company rejected Google’s offer, deciding instead to focus on achieving $1 billion in annual revenue and planning for an initial public offering. The decision comes on the heels of a recent major incident in the cybersecurity realm when a widespread outage at CrowdStrike impacted numerous businesses.
Wedbush analyst Dan Ives noted that concerns from investors and ongoing antitrust issues contributed to the breakdown of the deal. Google has faced heightened scrutiny from regulators and recently concluded a trial linked to Department of Justice allegations.
Ives emphasized that the failure of this acquisition could create ripple effects throughout the industry. He anticipates that Google will continue to intensify its efforts to expand its cybersecurity division, a sentiment likely echoed by its competitor Microsoft.
Ives added that the cybersecurity sector is ripe for consolidation and suggested that Microsoft may pursue acquisitions to strengthen its own cybersecurity offerings in the next year to 18 months.
The stakes were underscored when Microsoft faced backlash after a global IT outage last Friday, resulting from a problematic update to CrowdStrike’s software, which is used by Microsoft to safeguard its systems. Reports of “blue screens of death” were rampant as users experienced disruptions that affected businesses, flights, and government functions.
While Ives maintains that CrowdStrike remains a leading force in cybersecurity, the recent issues highlight the necessity for Microsoft to enhance its cybersecurity capabilities, a gap that Google’s unfulfilled acquisition of Wiz further emphasizes.