Wiz’s decision to decline Google’s acquisition offer could significantly impact Microsoft and the tech sector as a whole.
Google had aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but Wiz’s CEO Assaf Rappaport announced on Tuesday that they would not proceed with the deal. Rappaport emphasized that this tough decision was made to focus on growing Wiz towards achieving $1 billion in annual revenue and pursuing an initial public offering.
The acquisition could have strengthened Google’s cybersecurity capabilities, especially following a major outage attributed to CrowdStrike, an industry leader, at the end of last week. Wedbush analyst Dan Ives noted that investor concerns and ongoing antitrust issues contributed to the deal falling through, as Google has faced increasing scrutiny from regulators, culminating in a recent trial related to a Department of Justice case.
Ives stated in an email to investors that the failure of the Wiz acquisition would have repercussions throughout the cybersecurity sector. He anticipates that Google will continue to invest in expanding its cybersecurity endeavors despite this setback, a sentiment echoed for its competitor Microsoft.
Ives suggested that consolidation in the cybersecurity market is becoming necessary and that Microsoft may actively seek to enhance its cybersecurity solutions in the next 12 to 18 months. Microsoft recently faced backlash when a significant global IT outage occurred due to a problematic update in CrowdStrike’s cybersecurity software. This incident highlighted vulnerabilities for Microsoft, whose Windows operating system relies on CrowdStrike for security.
While Ives still regards CrowdStrike as a leading entity in cybersecurity, the outage could indicate that Microsoft needs to strengthen its cybersecurity operations, and the missed opportunity with Google’s acquisition further highlights this necessity.