Wiz backing out of the Google deal may have big implications for Microsoft, analyst says
What could have been Google’s largest acquisition is now off the table, which may have significant consequences for the tech industry, particularly for Microsoft.
Google had been negotiating to buy Israeli cybersecurity startup Wiz for $23 billion, but Wiz rejected the offer on Tuesday. Wiz CEO Assaf Rappaport stated that he made the “tough” decision to decline the substantial sum to focus on growing Wiz towards making $1 billion annually in revenue and planning for an IPO.
This acquisition would have enhanced Google’s cybersecurity business following a major industry disruption caused by CrowdStrike last week. Wedbush analyst Dan Ives noted in a research report that investor concerns and potential antitrust issues led to the deal’s collapse. Google has been under intense antitrust scrutiny and recently completed a trial in one of two major cases brought by the Department of Justice.
“We believe there will be ripple impacts across the sector from this deal not happening,” Ives wrote in an email to investors. He suggested that Google will likely continue to expand its cybersecurity efforts despite the failed Wiz deal, and Microsoft may follow suit.
“We believe consolidation is overdue in the cybersecurity sector, and we expect Microsoft may seek to strengthen its own cybersecurity platform over the next 12 to 18 months,” Ives noted.
Microsoft recently found itself in the spotlight due to a global IT outage caused by a faulty update to its cybersecurity software provided by CrowdStrike. The update led to significant disruptions for Microsoft users, affecting businesses, flights, and government operations worldwide. Despite this, Ives considers CrowdStrike to remain the “gold standard” of cybersecurity, but the incident could indicate that Microsoft needs to enhance its cybersecurity capabilities. The collapse of Google’s deal with Wiz may provide an opportunity for Microsoft to do so.