Google’s plans for its largest acquisition have fallen through, having a significant impact on the technology sector, particularly for Microsoft. The search engine giant aimed to acquire the Israeli cybersecurity startup Wiz for $23 billion. However, Wiz CEO Assaf Rappaport announced on Tuesday that the company has decided to reject the offer in pursuit of building towards $1 billion in annual revenue and preparing for an initial public offering (IPO).
This acquisition would have strengthened Google’s cybersecurity division, especially following a major outage attributed to CrowdStrike, a prominent player in the cyber industry, just days earlier. Wedbush analyst Dan Ives noted that investor apprehensions and ongoing antitrust issues contributed to the deal’s collapse. Google has faced heightened scrutiny regarding antitrust matters, having recently concluded a trial related to two significant cases brought by the Department of Justice.
In an email to investors, Ives stated, “We believe there will be ripple impacts across the sector from this deal not happening.” He indicated that Google would likely continue to focus on expanding its cybersecurity initiatives, a move mirrored by its competitor Microsoft.
Ives suggested that the cybersecurity sector is ripe for consolidation and predicted that Microsoft might look to enhance its cybersecurity platform within the next year or so. Microsoft recently faced backlash due to a global IT crisis stemming from a malfunctioning update to CrowdStrike’s cybersecurity software, which affected its Windows systems. Users reported being hit by the notorious “blue screens of death,” disrupting business operations, flights, and governmental activities worldwide.
Despite Ives labeling CrowdStrike as the “gold standard” in cybersecurity, this recent incident underscores the need for Microsoft to strengthen its cybersecurity capabilities, a gap emphasized further by Google’s unfulfilled acquisition of Wiz.