Wiz’s decision to walk away from a proposed acquisition by Google could significantly affect Microsoft and the broader tech industry.
Google had aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but Wiz’s CEO, Assaf Rappaport, announced on Tuesday that the company would be rejecting the offer. He stated that the difficult choice was made to focus on growing Wiz towards achieving $1 billion in annual revenue and pursuing an initial public offering (IPO).
The rejected acquisition would have enhanced Google’s cybersecurity capabilities, especially following a major service outage last week attributed to CrowdStrike, a key player in the cybersecurity sector. In a note to investors, Wedbush analyst Dan Ives highlighted that concerns regarding investor trust and antitrust ramifications contributed to the failure of the deal. Google has faced rigorous antitrust scrutiny in recent years and recently concluded a trial linked to one of two major cases initiated by the Department of Justice.
Ives mentioned that the cancellation of the deal could have broader implications across the industry. He anticipates that Google will continue to focus on expanding its cybersecurity presence despite the setback with Wiz. Similarly, Microsoft is expected to take steps to enhance its cybersecurity offerings.
Ives remarked that consolidation in the cybersecurity sector is overdue, and he predicts that Microsoft may pursue this avenue in the next 12 to 18 months. Microsoft has faced challenges recently, particularly highlighted by a recent global IT outage caused by a flawed update from CrowdStrike, which disrupted various sectors and drew negative attention to Microsoft. While Ives still regards CrowdStrike as a leader in cybersecurity, the disruption signals a potential need for Microsoft to strengthen its cybersecurity measures, with Google’s failed acquisition paving the way for new opportunities.