Wiz’s decision to decline Google’s acquisition offer could significantly impact the tech sector, particularly affecting Microsoft. The search engine giant aimed to acquire Israeli cybersecurity firm Wiz for $23 billion, but Wiz’s CEO Assaf Rappaport announced on Tuesday that they would not proceed with the deal. Rappaport stated that the choice, albeit challenging, was made to focus on growing Wiz towards generating $1 billion in annual revenue and preparing for an initial public offering.
This acquisition would have strengthened Google’s position in cybersecurity, especially following a recent substantial outage experienced by CrowdStrike, a competitor. In a research note, Wedbush analyst Dan Ives stated that apprehension from investors and antitrust scrutiny contributed to the decision’s collapse. Google has been under significant regulatory pressure and has recently concluded a trial linked to major antitrust cases from the Department of Justice.
Ives pointed out that the repercussions from this failed deal would be felt across the industry. He anticipates that Google will intensify its efforts to expand its cybersecurity services, as will its competitor Microsoft.
Moreover, Ives noted that consolidation within the cybersecurity market is overdue, suggesting that Microsoft may look to enhance its cybersecurity capabilities in the upcoming 12 to 18 months. Microsoft has recently faced challenges due to a widespread IT outage linked to a faulty update in cybersecurity software provided by CrowdStrike. Users reported issues like the “blue screens of death,” highlighting the urgent need for robust cybersecurity measures, especially as the marketplace evolves following Google’s thwarted acquisition of Wiz.