Wiz’s decision to withdraw from a deal with Google, which would have been its largest acquisition, is poised to have significant effects on the tech industry, particularly for Microsoft.
Wiz, an Israeli cybersecurity startup, had been in discussions for a $23 billion acquisition by Google but chose to decline the offer on Tuesday. CEO Assaf Rappaport explained that the choice was difficult but was made to focus on building Wiz with the goal of achieving $1 billion in annual revenue and preparing for an initial public offering (IPO).
This acquisition would have strengthened Google’s cybersecurity offerings at a time when the sector was recently disrupted by a major outage linked to CrowdStrike. Analyst Dan Ives from Wedbush noted that investor apprehensions and antitrust concerns contributed to the collapse of the deal. Google has faced considerable antitrust scrutiny lately, culminating in the conclusion of a significant trial initiated by the Department of Justice.
Ives stated in a correspondence with investors that the failure of this acquisition could create ripple effects throughout the industry. He anticipates that Google will continue to invest heavily in expanding its cybersecurity capabilities, a trend that is also expected for Microsoft.
Ives expressed confidence that the cybersecurity sector is ripe for consolidation and posits that Microsoft might pursue similar strategies to enhance its own cybersecurity platform in the upcoming 12 to 18 months.
Microsoft recently faced negative attention following a widespread global IT outage caused by a problematic update to its cybersecurity software, which is provided by CrowdStrike. This incident affected numerous Microsoft users, leading to disruptions in businesses, flights, and government functions.
While Ives maintains that CrowdStrike remains the top name in the cybersecurity field, the recent outage may suggest a need for Microsoft to strengthen its cybersecurity efforts, especially now that Google’s acquisition of Wiz is off the table.