The recent rejection of Google’s $23 billion acquisition offer for Israeli cybersecurity startup Wiz may have significant repercussions for the tech industry, especially concerning Microsoft. Wiz CEO Assaf Rappaport announced the decision to turn down the deal in order to focus on achieving $1 billion in annual revenue and preparing for an initial public offering.
The acquisition would have enhanced Google’s cybersecurity capabilities, particularly in light of recent disruptions in the industry following a major outage caused by cybersecurity firm CrowdStrike. Analyst Dan Ives highlighted in a recent research note that concerns related to investors and antitrust issues contributed to the failed acquisition. Google has faced intense antitrust scrutiny and recently concluded a significant trial related to two major cases filed by the Department of Justice.
Ives noted that the fallout from this deal’s collapse will likely affect the entire sector. He anticipates that Google will continue to invest in its cybersecurity efforts despite the setback, a trend that could also apply to its competitor, Microsoft.
Ives stated that there has been a long-standing need for consolidation in the cybersecurity market and suggested that Microsoft may seek to strengthen its cybersecurity platform in the next 12 to 18 months. Microsoft’s prominence in this area was recently highlighted amid a widespread global IT outage linked to a problematic update in its cybersecurity software provided by CrowdStrike. During the outage, users reported encountering issues that disrupted various operations, including businesses and flights.
Despite Ives referring to CrowdStrike as the “gold standard” for cybersecurity, the incident may indicate an increasing necessity for Microsoft to enhance its own cybersecurity initiatives, particularly following Google’s abandoned deal with Wiz.