Wiz’s decision to walk away from a potential acquisition by Google has significant implications for the technology sector, particularly for Microsoft.
The search engine giant was poised to acquire the Israeli cybersecurity startup Wiz for $23 billion, but the deal was rejected on Tuesday. Wiz CEO Assaf Rappaport stated that it was a “tough” choice, made in favor of pursuing the company’s goal of reaching $1 billion in annual revenue and moving toward an initial public offering (IPO).
This acquisition would have enhanced Google’s cybersecurity division, especially following a major incident at the end of last week involving CrowdStrike, which caused widespread outages in the cybersecurity landscape. Wedbush analyst Dan Ives noted in a research report that investor apprehension and antitrust challenges contributed to the breakdown of the deal. Google has faced considerable antitrust scrutiny and recently concluded a trial related to two significant cases from the Department of Justice.
Ives indicated that the failure of this transaction will create ripple effects throughout the industry. He suggested that Google will likely continue its efforts to expand its cybersecurity capabilities, and similarly, Microsoft may explore opportunities to strengthen its own cybersecurity offerings.
Ives mentioned that there is a pressing need for consolidation within the cybersecurity industry, and he expects Microsoft to take proactive steps to enhance its cybersecurity platform over the next 12 to 18 months. Following a significant global IT outage linked to a faulty update from CrowdStrike, which impacted Microsoft’s systems, there’s growing recognition of the need for improvement in cybersecurity measures. While CrowdStrike remains a leader in the field, this incident may signal an opportunity for Microsoft to enhance its cybersecurity business in light of Google’s unsuccessful acquisition of Wiz.