Wiz’s decision to decline a significant acquisition offer from Google could have far-reaching effects on the tech sector, particularly for Microsoft.
Google had aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but the deal was rejected by Wiz CEO Assaf Rappaport, who stated that he opted out of the offer to focus on growing the company towards an annual revenue of $1 billion and pursuing an initial public offering (IPO).
The acquisition would have strengthened Google’s presence in the cybersecurity arena, especially following a recent major disruption caused by CrowdStrike, a prominent player in the industry. Analyst Dan Ives from Wedbush noted that investor apprehensions and ongoing antitrust matters contributed to the deal’s collapse. Google has faced significant scrutiny regarding antitrust practices and has recently concluded a key trial related to a lawsuit by the Department of Justice.
Ives suggested that the failure of the deal could have cascading effects throughout the industry, though he believes Google will nonetheless push to enhance its cybersecurity capabilities. Microsoft is expected to follow a similar path.
He also pointed out that the cybersecurity sector is due for consolidation, predicting that Microsoft will seek to fortify its cybersecurity services within the next year or so. Recently, Microsoft faced criticism due to a widespread IT outage linked to an update of its cybersecurity software from CrowdStrike. This incident led to disruptions for users globally and highlighted the need for improvements in Microsoft’s cybersecurity framework. With the Wiz deal falling through, there’s now an even greater opportunity for Microsoft to enhance its cybersecurity offerings.