Wiz’s decision to withdraw from a significant acquisition by Google could greatly affect Microsoft, according to analysts.
Google’s proposed purchase of the Israeli cybersecurity firm Wiz for $23 billion has fallen through after Wiz’s CEO, Assaf Rappaport, chose to decline the offer. He cited the desire to focus on growing Wiz towards $1 billion in annual revenue and preparing for an IPO as the reasons behind this difficult decision.
The acquisition would have strengthened Google’s presence in the cybersecurity market, especially after recent turbulence in the industry sparked by a major outage related to CrowdStrike. Wedbush analyst Dan Ives commented that the breakdown of this deal resulted from investor concerns and ongoing antitrust issues facing Google, which has been under intense scrutiny and recently concluded a trial related to major lawsuits from the Department of Justice.
Ives noted in a message to investors that the fallout from this deal not going through will have broad implications for the technology sector. He believes that Google will likely increase efforts to expand its cybersecurity capabilities, as will Microsoft, its competitor.
Ives suggested that consolidation within the cybersecurity field is overdue, anticipating that Microsoft might pursue strategies to enhance its cybersecurity platform in the next year to 18 months. Microsoft recently faced scrutiny due to a widespread global IT outage triggered by a problematic update to its cybersecurity software from CrowdStrike, which disrupted various sectors, including businesses and government services.
Although Ives still regards CrowdStrike as a leading provider in the cybersecurity space, the outage highlights a critical need for Microsoft to strengthen its cybersecurity offerings, which might be further catalyzed by Google’s abandoned acquisition.