Wiz’s decision to withdraw from a potential deal with Google could significantly impact Microsoft, according to analysts. The Israeli cybersecurity startup was in discussions for what would have been Google’s largest acquisition at a valuation of $23 billion, but CEO Assaf Rappaport announced on Tuesday that Wiz would not proceed with the offer. Rappaport cited the desire to focus on growing the company toward generating $1 billion in annual revenue and pursuing an IPO.
The intended acquisition aimed to strengthen Google’s cybersecurity capabilities, especially following a recent major outage linked to the industry leader, CrowdStrike. Wedbush analyst Dan Ives suggested that concerns from investors and antitrust issues played a role in the failure of the deal. Google has faced intense scrutiny from antitrust authorities and recently concluded a trial related to one of two significant cases brought by the Department of Justice.
Ives noted that the collapse of the deal would likely create ripple effects across the tech industry. He suggested that Google would continue to invest heavily in its cybersecurity initiatives, a path that is expected to be followed by Microsoft as well. According to Ives, the cybersecurity sector is due for consolidation, and Microsoft may seek to enhance its own cybersecurity offerings in the next year to 18 months.
This heightened focus on cybersecurity comes after Microsoft faced scrutiny during a global IT outage caused by a flaw in software provided by CrowdStrike, affecting users and businesses worldwide. While Ives still regards CrowdStrike as the benchmark in cybersecurity, the recent disruptions suggest that Microsoft may need to strengthen its cybersecurity business, especially with the opportunities presented by the thwarted Google-Wiz deal.