Wiz’s decision to back out of a significant acquisition by Google could have major consequences for the tech sector, particularly for Microsoft.
Google had intended to acquire the Israeli cybersecurity startup Wiz for $23 billion; however, Wiz CEO Assaf Rappaport announced on Tuesday that the offer was rejected. Rappaport emphasized the challenging nature of this choice, explaining that the company aims to reach $1 billion in annual revenue and pursue an initial public offering (IPO) instead.
The acquisition would have strengthened Google’s cybersecurity division, especially following a major outage from CrowdStrike that recently rocked the industry. Analyst Dan Ives from Wedbush noted that investor apprehensions and ongoing antitrust challenges contributed to the failed deal. Google is currently facing significant scrutiny over its business practices and has recently concluded a trial related to one of two significant cases brought by the Department of Justice.
In the aftermath of this development, Ives indicated that the fallout could affect the broader sector. He anticipates that Google will continue to focus on expanding its cybersecurity capabilities, a path that Microsoft is expected to follow as well.
Ives highlighted that consolidation within the cybersecurity market is overdue, predicting that Microsoft may seek to enhance its own cybersecurity platform over the next year or so. The recent global IT outage caused by a problematic update from CrowdStrike further underscores the need for Microsoft to strengthen its cybersecurity offerings. Users around the world experienced disruptions, emphasizing the vulnerabilities that exist.
While Ives maintains that CrowdStrike is still regarded as a leader in the field, the recent incident indicates that Microsoft has opportunities to enhance its cybersecurity portfolio, making the collapse of the Google-Wiz deal even more significant.