Wiz’s decision to walk away from a potential deal with Google has significant ramifications for the tech sector, particularly for Microsoft.
Google had aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but Wiz CEO Assaf Rappaport announced on Tuesday that they have declined the offer. Rappaport described the decision as “tough,” emphasizing Wiz’s commitment to achieving $1 billion in annual revenue and pursuing an initial public offering (IPO) instead.
This acquisition would have enhanced Google’s cybersecurity capabilities shortly after a major incident involving CrowdStrike—a prominent player in the cybersecurity field—that caused widespread service disruption last week. Dan Ives, a Wedbush analyst, pointed out in a note to investors that concerns regarding antitrust regulations and investor sentiment contributed to the deal’s collapse. Google has recently faced considerable antitrust scrutiny and concluded a trial involving significant lawsuits from the Department of Justice.
Ives indicated that the fallout from the failed acquisition would create ripple effects across the industry. He forecasted that Google would likely intensify its efforts to expand its cybersecurity offerings despite the Wiz setback, and suggested that Microsoft may also pursue similar opportunities to enhance its cybersecurity platform in the coming 12 to 18 months.
The urgency for Microsoft to strengthen its cybersecurity infrastructure was underscored by the recent global IT outage triggered by a problematic software update from CrowdStrike, which affected their services. Users globally experienced significant disruptions, which highlighted vulnerabilities even though Ives maintains that CrowdStrike remains a top-tier provider in cybersecurity.
The cancellation of the Google-Wiz deal thus opens further opportunities for Microsoft to fortify its position in the cybersecurity market.