Wiz’s decision to reject Google’s acquisition offer could have significant repercussions for the tech industry, particularly for Microsoft.
Google had aimed to purchase the Israeli cybersecurity startup Wiz for $23 billion, but the deal fell through on Tuesday, with Wiz CEO Assaf Rappaport stating that the choice was tough but necessary for the company’s future growth toward reaching $1 billion in annual revenue and an eventual IPO.
This potential acquisition would have enhanced Google’s cybersecurity capabilities just as a major outage occurred due to CrowdStrike, causing a ripple effect in the industry. Wedbush analyst Dan Ives indicated in a recent note that concerns from investors and ongoing antitrust challenges contributed to the deal’s collapse. Google has faced significant antitrust scrutiny and recently completed a trial in one of its two major cases with the Department of Justice.
Ives suggested that the disruption of the deal would likely have widespread effects across the sector. He predicted that Google would continue to aggressively expand its cybersecurity efforts despite the failed acquisition, a sentiment mirrored by Microsoft.
He noted that consolidation within the cybersecurity space is overdue, hinting that Microsoft may seek to enhance its own cybersecurity platform in the next 12 to 18 months.
The recent global IT outage, which stemmed from a flawed update in CrowdStrike’s software used by Microsoft, highlighted vulnerabilities in Microsoft’s systems. Users worldwide experienced significant disruptions, particularly with Microsoft’s Windows operating system. While Ives continues to regard CrowdStrike as a leading player in cybersecurity, this incident suggests that Microsoft may benefit from strengthening its cybersecurity division, especially following Google’s unsuccessful bid for Wiz.