Wiz’s decision to walk away from a potential acquisition by Google could have significant consequences for Microsoft and the broader tech sector.
Google intended to purchase the Israeli cybersecurity company Wiz for $23 billion, but Wiz CEO Assaf Rappaport announced on Tuesday that the company declined the offer. Rappaport described the choice as a “tough” one, aiming instead to focus on growing Wiz towards achieving $1 billion in annual revenue and preparing for an initial public offering (IPO).
This acquisition would have enhanced Google’s cybersecurity capabilities at a time when the industry was already reeling from a major outage linked to CrowdStrike, a key player in the field. Analyst Dan Ives from Wedbush highlighted in a recent note that investor apprehensions and antitrust concerns were pivotal factors in the deal’s collapse. Google has faced considerable antitrust scrutiny and recently concluded a trial related to one of two major cases brought by the Department of Justice.
Ives commented that the failed acquisition will likely cause ripple effects throughout the sector, suggesting that Google will persist in its efforts to strengthen its cybersecurity division despite the setback. Similarly, Microsoft is expected to evaluate its cybersecurity strategies in the aftermath.
Ives noted that there is a growing need for consolidation in the cybersecurity space and anticipated that Microsoft might pursue similar efforts to enhance its own cybersecurity offerings in the upcoming 12 to 18 months.
This scenario comes in the wake of a recent global IT outage attributed to an error in CrowdStrike’s cybersecurity software used by Microsoft. The incident led to widespread disruptions, causing significant inconveniences for businesses and government operations alike. Despite Ives maintaining that CrowdStrike remains the industry benchmark for cybersecurity, the outage raises questions about Microsoft’s own cybersecurity measures, making its potential expansion in this area all the more pressing.