The cancellation of what would have been Google’s largest acquisition carries significant consequences for the technology sector, particularly for Microsoft.
Google had aimed to acquire Israeli cybersecurity startup Wiz for $23 billion, but Wiz declined the offer on Tuesday. CEO Assaf Rappaport explained that the decision was challenging but necessary to focus on growing Wiz to achieve annual revenues of $1 billion and preparing for an IPO.
This acquisition would have strengthened Google’s cybersecurity division, especially after a substantial outage within the industry, attributed to CrowdStrike, the previous week. According to Wedbush analyst Dan Ives, investor apprehensions and ongoing antitrust issues contributed to the deal’s collapse. Google has faced considerable antitrust scrutiny and recently concluded one of its major trials led by the Department of Justice.
Ives expressed that the failure of this deal will have ripple effects throughout the tech industry. He predicts that Google will continue to enhance its cybersecurity initiatives despite the setback with Wiz. Similarly, he anticipates that Microsoft will also seek to expand its cybersecurity platform within the next 12 to 18 months, as consolidation in the sector seems necessary.
Microsoft’s reputation faced challenges recently when a global IT failure linked to a faulty CrowdStrike update disrupted systems worldwide, leading to widespread issues for businesses and government operations. While Ives still regards CrowdStrike as a leader in cybersecurity, the recent outage underscores the need for Microsoft to strengthen its own cybersecurity offerings, and the collapse of the Google-Wiz deal may create further opportunities for them.