Wiz’s decision to walk away from a significant acquisition deal with Google could have substantial effects on Microsoft, according to analysts.
The tech giant had aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but on Tuesday, Wiz CEO Assaf Rappaport announced the decision to decline the offer. Rappaport described the choice as difficult, emphasizing Wiz’s goal to focus on reaching $1 billion in annual revenue and preparing for an initial public offering (IPO).
This acquisition would have strengthened Google’s presence in cybersecurity, especially following a recent severe outage linked to industry leader CrowdStrike. In light of Wiz’s rejection, Wedbush analyst Dan Ives noted that the deal’s collapse was influenced by investor hesitations and antitrust challenges, as Google faces ongoing scrutiny regarding its market practices and has just concluded a significant antitrust trial with the Department of Justice.
Ives stated, “We believe there will be ripple impacts across the sector from this deal not happening.” He anticipates that Google will intensify its efforts to expand its cybersecurity capabilities, a strategy that could also influence Microsoft.
Moreover, Ives suggested that consolidation within the cybersecurity sector is necessary and expects Microsoft to pursue enhancements to its cybersecurity platform over the next 12 to 18 months. This comes in the wake of a global IT outage caused by a problematic update in CrowdStrike’s cybersecurity software, which affected Microsoft’s systems. Reports of the infamous “blue screens of death” emerged as users experienced disruptions across various sectors, including business, travel, and government operations.
While Ives still considers CrowdStrike a leader in cybersecurity, this incident underscores the potential for Microsoft to strengthen its own cybersecurity offerings, particularly now that the Wiz acquisition has fallen through.