Wiz’s decision to reject Google’s acquisition offer could significantly impact the technology sector, particularly Microsoft.
Google had intended to acquire the Israeli cybersecurity company Wiz for $23 billion, but on Tuesday, Wiz CEO Assaf Rappaport announced the company’s decision to decline the offer. Rappaport emphasized that the choice was challenging but necessary for Wiz to focus on reaching $1 billion in annual revenue and pursuing an initial public offering.
The failed acquisition would have enhanced Google’s position in the cybersecurity market, especially in light of a major outage linked to CrowdStrike that occurred last week. Analyst Dan Ives from Wedbush noted in a report that concerns from investors and ongoing antitrust investigations were key factors that derailed the deal. Google has faced increased antitrust scrutiny in recent years and has just concluded one of two significant cases brought by the Department of Justice.
Ives expressed that the ramifications of the deal’s collapse will be felt throughout the sector. He expects Google to intensify its efforts in expanding its cybersecurity initiatives, a strategy likely mirrored by Microsoft.
He stated, “We believe consolidation is overdue in the cybersecurity sector, and we would expect Microsoft to potentially pursue this path and enhance its own cybersecurity platform over the next 12 to 18 months.”
Microsoft recently faced scrutiny following a significant global IT disruption related to a faulty update from CrowdStrike, which it relies on for cybersecurity. The issue led to widespread problems, with users around the world reporting system failures. While Ives acknowledged CrowdStrike as the “gold standard” in cybersecurity, he suggested that the outage signals a pressing need for Microsoft to strengthen its cybersecurity efforts, with the failed Wiz deal creating more opportunities for that expansion.