Wiz’s decision to withdraw from a potential $23 billion acquisition by Google could significantly impact the tech landscape, particularly concerning Microsoft.
The Israeli cybersecurity startup Wiz opted not to accept Google’s offer, a move that CEO Assaf Rappaport described as a difficult one. Instead, Rappaport aims to focus on growing Wiz towards generating $1 billion in annual revenue and preparing for an IPO.
This acquisition would have enhanced Google’s cybersecurity capabilities at a time when the industry was already on alert due to a significant outage triggered by CrowdStrike. Following the announcement of the failed deal, Wedbush analyst Dan Ives indicated in a research note that concerns among investors and ongoing antitrust issues contributed to the breakdown of the negotiations. Google’s encounters with antitrust scrutiny have intensified recently, culminating in a trial related to one of two major cases brought forth by the Department of Justice.
Ives predicted that the unsuccessful deal will have wider repercussions across the tech sector. He expects Google to intensify its efforts to expand within the cybersecurity realm, a sentiment mirrored by Microsoft as well. He wrote that consolidation in the cybersecurity space is necessary and suggested Microsoft might seek to enhance its cybersecurity offerings within the next 12 to 18 months.
The recent global IT outage linked to a flawed update of CrowdStrike’s cybersecurity software also highlighted vulnerabilities within Microsoft’s system. Users worldwide faced disruptions, referring to the infamous “blue screens of death.” Despite Ives maintaining that CrowdStrike remains the “gold standard” of cybersecurity, the incident signals that Microsoft could benefit from strengthening its cybersecurity portfolio, especially in light of Google’s unsuccessful merger attempt.