Wiz has decided to back out of a potential deal with Google, which would have been the tech giant’s largest acquisition at $23 billion. This decision is expected to significantly affect the technology sector, particularly Microsoft.
Wiz CEO Assaf Rappaport announced the difficult choice to decline Google’s offer, stating the focus will instead be on scaling the company towards a target of $1 billion in annual revenue and eventually pursuing an initial public offering (IPO). This missed opportunity would have enhanced Google’s presence in cybersecurity, especially in light of a major incident involving a significant outage linked to CrowdStrike at the end of the previous week.
According to Wedbush analyst Dan Ives, investor apprehensions and ongoing antitrust concerns were key factors contributing to the deal’s collapse. Google has faced heightened scrutiny from regulators and has recently concluded a trial connected to two major anti-competitive cases led by the Department of Justice.
Ives remarked that the cancellation of the deal would likely create ripple effects throughout the cybersecurity sector. Despite this setback, he anticipates that Google will intensify efforts to expand its cybersecurity initiatives, a sentiment echoed concerning Microsoft’s strategy.
Ives noted that consolidation within the cybersecurity industry is overdue, suggesting Microsoft may pursue acquisitions to enhance its own cybersecurity offerings in the next 12 to 18 months.
The context has been somewhat challenging for Microsoft, as the company faced backlash following a widespread global IT outage caused by a problematic update to its cybersecurity software supplied by CrowdStrike. This incident disrupted many businesses, flights, and government operations, leading to increased scrutiny of Microsoft’s cybersecurity measures. While Ives maintains that CrowdStrike remains a leader in the cybersecurity field, the recent outages demonstrate that there may be a pressing need for Microsoft to strengthen its offerings, an opportunity that appears to be more viable following the failed Wiz deal.