Wiz’s decision to back out of a major acquisition deal with Google could have significant consequences for Microsoft, according to an analyst. Google was in talks to purchase the Israeli cybersecurity startup Wiz for $23 billion, but the deal was rejected by Wiz’s CEO Assaf Rappaport, who opted to focus on growing the company toward achieving $1 billion in annual revenue and preparing for an IPO.
The deal would have enhanced Google’s cybersecurity operations, particularly in the wake of a substantial outage affecting CrowdStrike, a major player in the cybersecurity industry, just last week. Analyst Dan Ives from Wedbush highlighted that investor concerns and ongoing antitrust issues were pivotal in the dissolution of the deal. Google has faced increased scrutiny regarding its business practices and has recently completed a trial related to one of two major cases brought by the Department of Justice.
In an email to investors, Ives indicated that the failed acquisition would have ripple effects across the industry. He suggested that Google would likely intensify its efforts to expand its cybersecurity presence, as would Microsoft. Ives remarked that consolidation in the cybersecurity sector is necessary and anticipated that Microsoft might seek to strengthen its cybersecurity platform over the next year to 18 months.
Microsoft’s reputation recently took a hit due to a widespread global IT outage linked to a problematic update of its cybersecurity software provided by CrowdStrike. This incident prompted users worldwide to report issues, including the infamous “blue screen of death,” disrupting various sectors, including businesses, air travel, and government operations. Although Ives maintains that CrowdStrike remains a top-tier cybersecurity provider, the outage serves as a reminder that Microsoft may need to enhance its cybersecurity offerings further, especially with the opportunity created by Google’s abandoned deal.