Wiz’s decision to walk away from a major acquisition deal with Google is expected to have significant repercussions for the technology sector, particularly for Microsoft.
Google was poised to acquire the Israeli cybersecurity startup Wiz for $23 billion, but the deal fell through on Tuesday when Wiz’s CEO Assaf Rappaport announced the difficult decision to decline the offer. Rappaport aims to continue growing Wiz with the goal of reaching an annual revenue of $1 billion and pursuing an initial public offering (IPO).
This acquisition would have strengthened Google’s cybersecurity offerings, especially following a recent major outage involving CrowdStrike that had a substantial impact on the industry. According to Wedbush analyst Dan Ives, concerns from investors as well as ongoing antitrust challenges led to the deal’s collapse. Google has faced significant scrutiny from regulators and has just concluded its trial related to two major antitrust cases from the Department of Justice.
Ives indicated in a note to investors that the failure of this deal will create ripple effects throughout the sector. He believes Google will continue to aggressively expand its cybersecurity initiatives despite this setback. Microsoft, too, is expected to respond to this situation.
Ives suggests that consolidation within the cybersecurity industry is necessary and anticipates that Microsoft may seek to enhance its cybersecurity platform in the next 12 to 18 months. This comes after Microsoft faced criticism due to a global IT outage caused by a faulty update from CrowdStrike, which provides cybersecurity software for Microsoft’s Windows operating system. Users around the globe experienced disruptions, highlighting potential vulnerabilities in Microsoft’s platform.
Despite Ives’ affirmation that CrowdStrike remains a leading player in cybersecurity, the incident highlights the importance for Microsoft to potentially strengthen its own cybersecurity capabilities, an opportunity further emphasized by Google’s unsuccessful acquisition attempt.