Wiz’s decision to withdraw from the proposed acquisition by Google could have significant consequences for the technology sector, particularly for Microsoft.
Google had aimed to acquire the Israeli cybersecurity startup Wiz for $23 billion, but the offer was turned down on Tuesday. Wiz’s CEO, Assaf Rappaport, stated that rejecting the offer was a difficult choice aimed at allowing the company to pursue its goal of reaching $1 billion in annual revenue and preparing for an initial public offering.
This acquisition would have strengthened Google’s cybersecurity portfolio, especially in light of a recent major outage linked to CrowdStrike, an industry leader. In a research note following the rejection of the deal, Wedbush analyst Dan Ives noted that investor concerns and antitrust challenges contributed to the deal’s collapse. Google has faced intense antitrust scrutiny over the years and recently concluded a trial concerning one of two major cases brought by the Department of Justice.
Ives predicted that the cancellation of this acquisition would create broader implications in the tech sector. He anticipates that Google will intensify its efforts to expand in cybersecurity despite this setback, and he expects that Microsoft will also pursue similar strategies.
Furthermore, Ives believes that consolidation in the cybersecurity sector is overdue, suggesting that Microsoft could enhance its own cybersecurity offerings in the next 12 to 18 months. This comes after Microsoft faced criticism during a recent widespread IT outage due to a faulty update in CrowdStrike’s cybersecurity software, which affected numerous users globally. While Ives maintains that CrowdStrike remains the benchmark for cybersecurity, the incident underscores the need for Microsoft to strengthen its cybersecurity capabilities, with the failed Wiz acquisition potentially creating new opportunities for growth.