Wiz’s decision to withdraw from a major acquisition by Google could have significant ramifications for Microsoft, according to analysts.
The tech giant had aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but on Tuesday, Wiz’s CEO Assaf Rappaport announced the rejection of the offer. Rappaport described the choice as a challenging one, emphasizing the company’s mission to continue its growth toward achieving $1 billion in annual revenue and pursuing an initial public offering.
This acquisition would have strengthened Google’s position in the cybersecurity field, particularly following a massive service disruption experienced by CrowdStrike, an industry leader, last week. Analyst Dan Ives from Wedbush pointed out that factors such as investor apprehension and antitrust issues led to the deal’s collapse. Google has faced intense scrutiny regarding antitrust practices and recently concluded a trial connected to two major cases from the Department of Justice.
Ives noted in an email to investors that the breakdown of the acquisition could lead to broader effects within the tech sector. He anticipates that Google will continue to enhance its cybersecurity offerings despite the setback, a strategy likely mirrored by Microsoft.
“We believe consolidation is overdue in the cybersecurity sector, and expect Microsoft to pursue opportunities to strengthen its own cybersecurity platform in the next 12 to 18 months,” Ives stated.
Microsoft has recently come under scrutiny due to a significant global IT outage attributed to a flawed update in its cybersecurity software, supplied by CrowdStrike. Users reported issues such as “blue screens of death,” resulting in widespread disruptions across various sectors, including businesses, air travel, and government operations.
While Ives maintains that CrowdStrike is still the benchmark for cybersecurity, the recent outage suggests that Microsoft may need to enhance its cybersecurity capabilities, and the collapse of Google’s acquisition could create further opportunities for such developments.