Wiz’s decision to back out of a potential acquisition by Google could have significant consequences for the tech sector, particularly for Microsoft.
Google had aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but Wiz CEO Assaf Rappaport announced on Tuesday that the company would not accept the offer. Rappaport explained that this “tough” choice was made to focus on growing Wiz towards achieving $1 billion in annual revenue and preparing for an initial public offering.
This acquisition would have enhanced Google’s cybersecurity capabilities amid recent industry turbulence, which included a major outage caused by CrowdStrike, a leading cybersecurity firm. Wedbush analyst Dan Ives noted in a research note that concerns from investors and antitrust challenges contributed to the deal’s collapse. Google has faced numerous antitrust investigations recently, culminating in its trial linked to a significant case from the Department of Justice.
Ives highlighted the potential ripple effects across the tech sector due to the failed acquisition, suggesting that Google will likely continue to strengthen its cybersecurity initiatives, a trend that Microsoft is expected to follow as well.
He pointed out that the cybersecurity field is ripe for consolidation, predicting that Microsoft could seek to enhance its own cybersecurity offerings within the next year to 18 months. Microsoft recently faced criticism due to a widespread global IT outage linked to a problematic update in CrowdStrike’s cybersecurity software, underscoring the need for it to bolster its cybersecurity capabilities — an opportunity further amplified by Google’s failed pursuit of Wiz.