Wiz’s decision to reject an acquisition proposal from Google could significantly impact the tech sector, particularly Microsoft.
Google had intended to purchase the Israeli cybersecurity firm Wiz for $23 billion, but on Tuesday, Wiz CEO Assaf Rappaport announced the company would not proceed with the deal. Rappaport explained that this difficult choice was made to focus on building Wiz towards generating $1 billion annually in revenue and pursuing an initial public offering.
This acquisition would have strengthened Google’s cybersecurity capabilities, especially following a recent major outage attributed to CrowdStrike, an issue that unsettled the cybersecurity landscape. Wedbush analyst Dan Ives noted in a research note that concerns from investors and potential antitrust issues led to the deal’s collapse. Google has faced significant antitrust scrutiny recently, concluding its trial in one of two major cases from the Department of Justice.
Ives indicated that the absence of this deal will have reverberating effects throughout the sector, yet he believes Google will likely intensify its efforts to expand its cybersecurity division. Microsoft, a key competitor, is also expected to react accordingly.
Ives further commented that consolidation is needed in the cybersecurity field and anticipated that Microsoft might seek to enhance its cybersecurity platform over the next 12 to 18 months. Microsoft recently encountered negative attention due to global IT disruptions caused by a faulty update to CrowdStrike’s cybersecurity software. Although CrowdStrike remains a leader in the field, this incident highlights the necessity for Microsoft to strengthen its cybersecurity capabilities, a need that may be exacerbated by Google’s failed acquisition attempt.