Wiz’s decision to walk away from a significant acquisition offer from Google could have substantial consequences for the tech sector, particularly affecting Microsoft.
Google had aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but the startup opted to reject the offer. Wiz CEO Assaf Rappaport stated that turning down the substantial offer was a “tough” decision, as the company focuses on its growth trajectory, aspiring to reach $1 billion in annual revenue and aim for an initial public offering (IPO).
This acquisition would have enhanced Google’s cybersecurity capabilities, especially following a recent major outage linked to industry player CrowdStrike. In a research note, Wedbush analyst Dan Ives indicated that concerns from investors and ongoing antitrust issues led to the collapse of the deal. Google has been under considerable antitrust scrutiny and has recently concluded its trial in one of two prominent cases brought by the Department of Justice.
Ives noted that the failed acquisition is likely to have ripple effects throughout the sector. He anticipates that Google will continue to aggressively expand its cybersecurity operations, a trend expected to be mirrored by Microsoft.
According to Ives, the cybersecurity industry is due for consolidation, and he expects Microsoft to seek enhancements to its own cybersecurity offerings over the next year to 18 months. Microsoft faced criticism after a worldwide IT outage caused by a malfunctioning update of its cybersecurity software, which is supplied by CrowdStrike. This incident led to disruptions for businesses, flights, and government activities globally.
Despite Ives acknowledging that CrowdStrike remains the leading standard in cybersecurity, the recent outage suggests that Microsoft may need to strengthen its cybersecurity capabilities, a potential opportunity further opened by Google’s unfulfilled acquisition of Wiz.