Wiz’s decision to decline Google’s acquisition offer could significantly impact Microsoft and the tech industry as a whole.
Google had aimed to purchase the Israeli cybersecurity firm Wiz for $23 billion, but the startup’s CEO, Assaf Rappaport, announced on Tuesday that they chose to reject the offer. Rappaport described the choice as “tough,” stating that Wiz aims to achieve $1 billion in annual revenue and pursue an initial public offering (IPO).
This acquisition would have enhanced Google’s cybersecurity capabilities, especially in light of a recent major outage caused by industry leader CrowdStrike. Following the failed negotiations, Wedbush analyst Dan Ives noted that concerns from investors and ongoing antitrust scrutiny contributed to the deal’s collapse. Google has faced considerable antitrust challenges in recent years, and it recently concluded a trial related to one of two significant cases brought forth by the Department of Justice.
Ives mentioned in a note to investors that the lack of this deal would likely have “ripple impacts” throughout the cybersecurity sector. Despite this setback, he expects Google to continue expanding its cybersecurity initiatives, a trend that will also likely be pursued by Microsoft.
According to Ives, there is an overdue need for consolidation in the cybersecurity market, and he anticipates that Microsoft may look to strengthen its cybersecurity offerings in the next 12 to 18 months. Microsoft recently faced negative attention due to a widespread global IT outage linked to a flawed update from CrowdStrike, which affected its cybersecurity software. Users worldwide experienced interruptions, resulting in significant disruptions in business, air travel, and government functions.
While Ives still considers CrowdStrike the “gold standard” in cybersecurity, the recent outage suggests that Microsoft would benefit from enhancing its cybersecurity measures, and the failure of Google’s acquisition opens up further opportunities for the tech giant.