Wiz’s decision to back out of a potential acquisition deal with Google could significantly impact the tech landscape, particularly for Microsoft.
The Israeli cybersecurity startup Wiz had been the target of a substantial $23 billion acquisition by Google, but on Tuesday, Wiz CEO Assaf Rappaport announced that the company had decided to decline the offer. Rappaport indicated that the choice was difficult but necessary to focus on growing Wiz towards an annual revenue of $1 billion and preparing for an eventual IPO.
This acquisition would have strengthened Google’s position in the cybersecurity sector, especially following a major outage linked to a well-known player, CrowdStrike, which rocked the industry last week. In a research note, Wedbush analyst Dan Ives pointed out that concerns from investors and rising antitrust challenges led to the collapse of the deal. Google has faced increasing scrutiny and just completed a trial related to one of two significant antitrust cases instigated by the Department of Justice.
Ives suggested that the failed acquisition would send shockwaves throughout the industry, and he believes Google will continue to focus on expanding its cybersecurity capabilities despite losing out on Wiz. Competitor Microsoft is also expected to take similar steps.
According to Ives, “consolidation is overdue in the cybersecurity sector,” and he anticipates that Microsoft may actively seek to enhance its cybersecurity offerings in the next 12 to 18 months. The company’s reputation took a hit recently due to a global IT outage caused by a defect in its cybersecurity software supplied by CrowdStrike. Users around the world experienced issues with Microsoft’s systems, including the infamous “blue screen of death,” resulting in disruptions across various sectors.
While Ives maintains that CrowdStrike remains a leading figure in cybersecurity, the recent outage suggests that Microsoft could benefit from strengthening its own cybersecurity infrastructure, making Google’s failed acquisition a pivotal moment for future industry dynamics.