Wiz’s decision to reject Google’s acquisition offer may have significant ramifications for the tech sector, particularly for Microsoft. The search engine giant aimed to acquire the Israeli cybersecurity startup for $23 billion, but Wiz’s CEO Assaf Rappaport announced on Tuesday that he opted against the deal. Rappaport cited a desire to focus on growing Wiz toward achieving $1 billion in annual revenue and pursuing an initial public offering (IPO) as the reasons behind this difficult choice.
This acquisition, if it had gone through, would have strengthened Google’s position in the cybersecurity field, especially following a recent major outage linked to CrowdStrike, a prominent player in the industry. According to Wedbush analyst Dan Ives, the deal’s collapse can be attributed to investor concerns and ongoing antitrust scrutiny that Google has faced, particularly in light of its recent trial related to two prominent cases from the Department of Justice.
Ives noted in his research that the fallout from this failed acquisition could ripple throughout the cybersecurity industry. He anticipates that Google will continue to enhance its cybersecurity initiatives, as will Microsoft. Ives predicts that the cybersecurity sector is ripe for consolidation and suggests that Microsoft may seek to enhance its cybersecurity platform in the next 12 to 18 months.
The timing of this speculation is notable, as Microsoft has recently come under scrutiny due to a widespread IT outage caused by a problematic update to its cybersecurity software, which is provided by CrowdStrike. This disruption led to significant issues for businesses, flights, and government services globally, with users experiencing widespread system failures. While Ives maintains that CrowdStrike remains a leading name in cybersecurity, this incident highlights the need for Microsoft to strengthen its cybersecurity offerings, especially in light of Google’s abandoned deal.