Wiz’s decision to walk away from a $23 billion acquisition offer from Google could significantly impact the tech industry, especially Microsoft. This development comes as Wiz CEO Assaf Rappaport opted to reject the deal to focus on building the company towards an ambitious goal of achieving $1 billion in annual revenue and pursuing an initial public offering.
The potential acquisition was expected to strengthen Google’s cybersecurity division, particularly after a major outage linked to cybersecurity firm CrowdStrike last week. Analyst Dan Ives from Wedbush pointed out that concerns among investors and ongoing antitrust challenges led to the deal’s downfall. Google has faced increasing scrutiny from regulators, recently concluding a trial in one of two major cases brought by the Department of Justice.
Ives noted in an email to investors that the failed acquisition could trigger a chain reaction across the tech sector. He anticipates that Google will likely intensify its efforts to expand its cybersecurity offerings, a strategy that Microsoft may also pursue. “Consolidation is overdue in the cybersecurity sector,” Ives stated, suggesting that Microsoft might look to enhance its cybersecurity capabilities in the next 12 to 18 months.
This context is further emphasized by the recent global IT outage connected to a faulty update in CrowdStrike’s software, which affected Microsoft systems. Users worldwide experienced significant disruptions, indicating a potential need for Microsoft to strengthen its cybersecurity infrastructure, especially with Google’s abandoned deal potentially paving the way for increased competition in the sector.