Wiz’s withdrawal from the Google acquisition may have significant effects on Microsoft, according to an analyst.
What was poised to be Google’s largest acquisition has been halted, and this could greatly impact the tech sector, particularly Microsoft.
Google had been in the process of acquiring Israeli cybersecurity startup Wiz for $23 billion. However, on Tuesday, Wiz turned down the offer. Wiz CEO Assaf Rappaport stated the challenging decision was made to focus on growing Wiz’s annual revenue to $1 billion and pursuing an initial public offering (IPO).
This acquisition would have strengthened Google’s cybersecurity services following a major outage caused by cybersecurity firm CrowdStrike last week. Wedbush analyst Dan Ives noted that investor concerns and antitrust issues led to the termination of the deal. In recent years, Google has faced intense antitrust scrutiny, most recently concluding a trial in one of two significant cases brought by the Department of Justice.
Ives wrote in a note to investors that the fallout from the failed deal could have widespread effects across the sector. He mentioned that despite the deal not materializing, Google is likely to continue enhancing its cybersecurity capabilities. Similarly, its competitor Microsoft is expected to take action.
Ives highlighted the overdue nature of consolidation within the cybersecurity sector, suggesting Microsoft may explore strengthening its own platform over the next 12 to 18 months.
Microsoft recently faced scrutiny following a global IT outage linked to a faulty update to its cybersecurity software, provided by CrowdStrike. The issue caused widespread “blue screens of death” and disrupted businesses, flights, and government operations. Microsoft uses CrowdStrike to detect and prevent hacking attempts on its operating systems.
Although Ives continues to regard CrowdStrike as the “gold standard” in cybersecurity, the outage suggests Microsoft may need to enhance its cybersecurity business, a task made more critical by Google’s failed acquisition.