Wiz backing out of the Google deal could significantly impact Microsoft, analyst says
Google’s potential largest acquisition is off the table, which could have notable implications for the tech industry, particularly for Microsoft.
The search giant aimed to acquire Israeli cybersecurity startup Wiz for $23 billion. However, on Tuesday, Wiz rejected Google’s offer. Wiz CEO Assaf Rappaport explained the “tough” decision to decline the substantial sum, preferring to continue building Wiz with the goal of achieving $1 billion in annual revenue and pursuing an IPO.
This move would have strengthened Google’s cybersecurity business, especially after a significant outage caused by industry leader CrowdStrike late last week. Wedbush analyst Dan Ives noted in a research report that concerns over investor reactions and antitrust issues led to the deal’s collapse. Google has faced intense antitrust scrutiny in recent years and recently concluded a trial in one of two major cases from the Department of Justice.
“We believe there will be ripple impacts across the sector from this deal not happening,” Ives stated in an email to investors. He suggested that Google will likely pursue further expansion of its cybersecurity presence despite the failed Wiz deal, and rival Microsoft will also intensify its efforts.
“We believe consolidation is overdue in the cybersecurity sector, and we expect Microsoft might pursue similar strategies to strengthen its own cybersecurity platform over the next 12 to 18 months,” Ives added.
Microsoft recently faced criticism following a global IT outage due to a faulty update to its cybersecurity software provided by CrowdStrike. Microsoft’s Windows relies on CrowdStrike to detect and prevent hacking attempts. Users worldwide reported encountering the “blue screen of death,” with the outage disrupting businesses, flights, and government operations.
Ives still views CrowdStrike as the “gold standard” of cybersecurity, but the outage indicates that Microsoft could benefit from enhancing its cybersecurity business. Google’s failed deal with Wiz might further encourage this direction.