Wiz’s decision to withdraw from a potential acquisition deal with Google could significantly impact the technology sector, particularly Microsoft.
Google intended to acquire the Israeli cybersecurity startup Wiz for $23 billion, but Wiz CEO Assaf Rappaport announced on Tuesday that they had opted to decline the offer. Rappaport stated that it was a difficult choice but essential for Wiz to focus on achieving $1 billion in annual revenue and preparing for an initial public offering (IPO).
This acquisition would have strengthened Google’s cybersecurity division, especially following a recent major outage linked to CrowdStrike, a prominent player in the industry. Analyst Dan Ives from Wedbush mentioned in a research note that concerns from investors and antitrust complications led to the deal’s collapse. Google has faced considerable antitrust scrutiny lately, having recently concluded a trial related to a major case initiated by the Department of Justice.
Ives indicated that the failure to finalize the acquisition could have broader implications throughout the technology sector. He noted that Google is expected to persist in enhancing its cybersecurity capabilities, as will its competitor Microsoft.
Ives suggested that there is a pressing need for consolidation within the cybersecurity sector, predicting that Microsoft may pursue similar strategies to strengthen its cybersecurity offerings in the next year to year and a half.
Microsoft recently faced criticism during a global IT outage caused by a problematic update to CrowdStrike’s cybersecurity software. Users worldwide reported issues with Microsoft’s systems, which were impacted by this disruption, affecting various sectors including business and government operations.
Although Ives still regards CrowdStrike as the industry’s “gold standard,” the outage signifies that Microsoft may need to enhance its cybersecurity measures, and the collapse of the Wiz acquisition may create further opportunities in that regard.