Wiz’s decision to back out of a significant acquisition deal with Google could have important consequences for Microsoft, according to analysts.
Google had aimed to purchase the Israeli cybersecurity startup Wiz for $23 billion, but the offer was turned down by Wiz CEO Assaf Rappaport, who stated that the choice was made to focus on growing the company towards achieving $1 billion in annual revenue and preparing for an initial public offering (IPO).
This acquisition would have significantly enhanced Google’s cybersecurity division, particularly in light of a recent major outage associated with CrowdStrike, a major player in the industry. Following this news, Wedbush analyst Dan Ives noted that factors such as investor anxiety and ongoing antitrust challenges were likely contributors to the deal’s collapse. Google has faced extensive antitrust scrutiny in recent years, including a trial relating to two high-profile cases from the Department of Justice.
Ives highlighted that the ripple effects from this failed acquisition would be felt throughout the tech sector. He suggested that Google is expected to continue investing in its cybersecurity segment, a sentiment echoed for Microsoft as well.
Ives expressed that there is a pressing need for consolidation in the cybersecurity field, indicating that Microsoft might pursue similar strategies to enhance its own cybersecurity offerings over the next 12 to 18 months.
Microsoft recently faced scrutiny due to a widespread global IT outage caused by an error in an update for its cybersecurity software, which is provided by CrowdStrike. Users experienced significant disruptions, including the infamous “blue screen of death,” impacting businesses, flights, and government functionality globally.
While Ives maintains that CrowdStrike remains a leader in cybersecurity, the recent outage signals a potential need for Microsoft to strengthen its cybersecurity capabilities, especially with Google’s abandoned acquisition presenting new opportunities in the market.