Wiz’s decision to back out of a potential acquisition by Google could have significant repercussions for Microsoft and the broader tech industry.
The search engine giant had aimed to acquire Israeli cybersecurity firm Wiz for $23 billion, but Wiz CEO Assaf Rappaport announced on Tuesday that they would not accept the offer. Rappaport explained that turning down the proposal was a difficult choice, as the company’s goal is to focus on building towards $1 billion in annual revenue and preparing for an initial public offering (IPO).
This acquisition would have strengthened Google’s cybersecurity capabilities, particularly following a major outage linked to CrowdStrike, a significant player in the industry, that occurred last week. Analyst Dan Ives from Wedbush noted that investor apprehensions and ongoing antitrust challenges led to the collapse of the deal. Google has been under intense scrutiny regarding antitrust issues and recently concluded a trial related to one of its two major cases with the Department of Justice.
Ives expressed in a note to investors that the aborted deal would likely create ripple effects throughout the tech sector. He anticipates that Google will continue to aggressively expand its cybersecurity initiatives despite the setback, a trend that may also be mirrored by Microsoft.
Ives pointed out that consolidation in the cybersecurity space is needed and forecasted that Microsoft might pursue opportunities to enhance its cybersecurity offerings in the next 12 to 18 months.
Microsoft found itself in a challenging spotlight after a widespread global IT outage attributed to a faulty update of CrowdStrike’s software last Friday. This incident affected Microsoft’s Windows systems, leading to numerous reports of users encountering serious issues. Although Ives still regards CrowdStrike as a leading name in cybersecurity, the outage suggests that Microsoft could benefit from strengthening its own cybersecurity portfolio, especially in light of Google’s failed acquisition attempt.