Wiz’s decision to back out of a proposed acquisition deal with Google, which would have been valued at $23 billion, could have significant repercussions for the tech sector, particularly affecting Microsoft.
Wiz CEO Assaf Rappaport announced on Tuesday that the company decided not to accept Google’s offer, describing the choice as “tough” but necessary for the startup’s plans to grow towards $1 billion in annual revenue and to prepare for an initial public offering (IPO).
The acquisition would have enhanced Google’s cybersecurity division, especially following a recent major outage caused by CrowdStrike, a key player in the industry. According to Wedbush analyst Dan Ives, the deal fell through due to investor anxieties and ongoing antitrust investigations into Google, which recently concluded a trial related to major antitrust cases brought by the Department of Justice.
Ives highlighted that the failure of this deal would likely create ripple effects across the tech sector. He noted that despite the deal’s collapse, Google would likely remain committed to expanding its cybersecurity capabilities, a sentiment echoed for Microsoft as well.
He pointed out that the cybersecurity sector is ripe for consolidation and anticipates that Microsoft may pursue opportunities to enhance its cybersecurity services within the next 12 to 18 months.
This call for expansion comes after Microsoft faced scrutiny during a widespread IT outage that was linked to a problematic update in CrowdStrike’s cybersecurity software. Users around the world reported seeing system failures, leading to disruption in various sectors, including business operations and transportation.
While Ives maintains that CrowdStrike remains a leading player in cybersecurity, the recent outage underscores the need for Microsoft to strengthen its cybersecurity offerings, with the dissolution of the Wiz deal potentially paving the way for new opportunities.