The collapse of Google’s potential acquisition of Israeli cybersecurity startup Wiz for $23 billion could have significant repercussions for the technology sector, particularly concerning Microsoft.
Wiz CEO Assaf Rappaport stated on Tuesday that the company would not accept Google’s offer, making a “tough” choice to focus on achieving $1 billion in annual revenue and preparing for an initial public offering instead. This rejected deal would have strengthened Google’s cybersecurity portfolio at a time when the industry was already reeling from a major outage caused by CrowdStrike last week.
Wedbush analyst Dan Ives noted in a research report that concerns surrounding investor sentiment and antitrust issues contributed to the abandonment of the deal. Google has faced rigorous antitrust scrutiny and recently concluded its trial related to significant legal challenges from the Department of Justice.
Ives mentioned that the ripple effects from the Wiz deal not going through could be felt across the industry. He anticipates that Google will continue to aggressively expand its cybersecurity capabilities despite the setback, a strategy that Microsoft is likely to follow as well.
Ives indicated that consolidation within the cybersecurity sector is overdue, and he expects Microsoft to pursue enhancements to its own cybersecurity platforms in the next 12 to 18 months. This comes on the heels of a significant global IT outage linked to a problematic update to CrowdStrike’s cybersecurity software, which impacts Microsoft’s systems and left many users facing critical disruptions.
While Ives reaffirmed CrowdStrike’s reputation as a top player in cybersecurity, the recent outage signals that Microsoft may need to enhance its cybersecurity offerings, and Google’s failed acquisition could present further opportunities for them to do so.