Wiz’s decision to back out of a potential acquisition by Google is expected to have significant ramifications for the tech industry, particularly Microsoft. The Israeli cybersecurity firm had been in talks with Google for a $23 billion acquisition, but Wiz CEO Assaf Rappaport announced on Tuesday that the company would decline the offer in favor of pursuing an independent growth strategy aimed at achieving $1 billion in annual revenue and preparing for an initial public offering (IPO).
The acquisition would have enhanced Google’s cybersecurity capabilities, especially following a recent global IT outage linked to a major incident involving CrowdStrike, a rival cybersecurity firm. Analyst Dan Ives from Wedbush noted that concerns among investors and ongoing antitrust issues were key factors contributing to the breakdown of the deal. Google has been under intense scrutiny for antitrust practices and recently concluded a trial related to one of the two major cases brought by the Department of Justice.
Ives pointed out that the failure of this acquisition could lead to significant ripple effects throughout the industry. He predicts that Google will still strive to expand its cybersecurity services in light of the Wiz deal falling through, a strategy likely mirrored by Microsoft. He speculated that consolidation in the cybersecurity sector is overdue and anticipates Microsoft may pursue similar acquisitions to enhance its cybersecurity platform over the next 12 to 18 months.
Microsoft’s challenges were highlighted during a widespread IT outage caused by a compromised update to CrowdStrike’s cybersecurity software, which affected Windows users globally. Reports of the “blue screens of death” surfaced as Microsoft systems were disrupted, impacting various businesses, flights, and government operations.
Despite the incident, Ives continues to regard CrowdStrike as a leading standard in cybersecurity, but the recent outage suggests that Microsoft could benefit from strengthening its own cybersecurity business. The failed deal with Wiz may provide Microsoft with a greater impetus to expand its cybersecurity capabilities moving forward.