Wiz’s decision to back out of its proposed $23 billion acquisition by Google, which would have been the tech giant’s largest purchase to date, is expected to have significant ramifications for the technology sector, especially for Microsoft.
Wiz’s CEO, Assaf Rappaport, announced on Tuesday that the company would not proceed with Google’s offer, as he aims to steer Wiz toward achieving a $1 billion annual revenue target and an eventual initial public offering. This development comes just after the cybersecurity industry faced turmoil due to a major outage linked to CrowdStrike, a key player in the field.
Wedbush analyst Dan Ives highlighted in a research note that investor apprehensions and ongoing antitrust concerns contributed to the collapse of the deal. Google has been under substantial antitrust scrutiny and recently concluded a trial related to one of two significant cases initiated by the Department of Justice.
Ives predicts that the failure of the Wiz acquisition will create ripple effects throughout the cybersecurity sector. He anticipates that Google will continue to focus on expanding its cybersecurity initiatives, as will its competitor Microsoft. Ives noted that the cybersecurity market is ripe for consolidation and expects Microsoft to explore opportunities to enhance its cybersecurity offerings over the next year to 18 months.
Microsoft recently faced criticism due to a widespread IT outage caused by a faulty update to its cybersecurity software from CrowdStrike. This incident affected users globally, leading to disruptions in businesses, air travel, and government functions. Despite Ives previously referring to CrowdStrike as the “gold standard” in cybersecurity, the incident suggests that Microsoft may need to strengthen its own cybersecurity capabilities, with the failed Google deal potentially presenting new opportunities in this regard.