Wiz’s decision to walk away from a deal with Google could have significant repercussions for Microsoft and the tech sector at large.
Previously, Google had aimed to acquire Israeli cybersecurity startup Wiz for $23 billion. However, Wiz CEO Assaf Rappaport announced on Tuesday that the company would reject the substantial offer to focus on reaching an annual revenue goal of $1 billion and pursuing an initial public offering (IPO).
This acquisition would have strengthened Google’s position in the cybersecurity market, especially following a major outage caused by CrowdStrike, another player in the industry, last week. According to Wedbush analyst Dan Ives, the deal’s collapse resulted from investor skepticism and ongoing antitrust challenges faced by Google. The company has recently been under heightened scrutiny and has concluded its trial related to one of two significant cases initiated by the Department of Justice.
Ives expressed in a note to investors that the failure of this deal could trigger ripple effects throughout the cybersecurity sector. He expects Google to intensify its efforts to expand its cybersecurity initiatives in light of the setback, a trend that is likely to be mirrored by Microsoft.
Ives noted that the cybersecurity industry is ripe for consolidation, predicting that Microsoft may consider enhancing its cybersecurity offerings in the coming 12 to 18 months. This comes on the heels of recent disruptions caused by a faulty update to CrowdStrike’s software, which affected users of Microsoft’s Windows operating system globally. Many users reported encountering significant issues, impacting businesses, flights, and government services.
While Ives maintains that CrowdStrike remains a leading figure in cybersecurity, the incident suggests that there is a pressing need for Microsoft to strengthen its cybersecurity capabilities, and the end of Google’s acquisition bid for Wiz may facilitate this opportunity.