Wiz’s decision to decline Google’s acquisition offer could have significant consequences for the tech industry, particularly for Microsoft.
The search giant was set to acquire the Israeli cybersecurity firm Wiz for $23 billion, but on Tuesday, Wiz’s CEO Assaf Rappaport announced that the company would not be accepting the offer. Rappaport stated that this difficult choice was made to focus on growing Wiz towards achieving $1 billion in annual revenue and pursuing an initial public offering (IPO).
The acquisition was expected to enhance Google’s cybersecurity capabilities, especially following a major outage affecting the industry last week caused by CrowdStrike. Analyst Dan Ives from Wedbush noted that concerns among investors and ongoing antitrust issues contributed to the collapse of the deal. Google has faced considerable antitrust scrutiny and recently concluded one of its trials related to a significant case from the Department of Justice.
Ives indicated in a note to investors that the failure of this acquisition would create ripple effects throughout the sector. He suggested that Google is likely to continue focusing on expanding its cybersecurity initiatives despite the disappointment with Wiz. He also pointed out that Microsoft could take similar steps.
Ives expressed his belief that consolidation in the cybersecurity field is necessary, and he anticipates that Microsoft may seek to enhance its own cybersecurity platform in the next 12 to 18 months.
The recent global IT outage, which was linked to a faulty update in CrowdStrike’s software integral to Microsoft’s Windows systems, thrust Microsoft into negative headlines. This incident, which led to disruptions for businesses, flights, and government operations worldwide, may signal that Microsoft should strengthen its cybersecurity offerings, especially in light of Google’s unsuccessful acquisition effort.