Wiz’s decision to back out of a potential acquisition by Google could have significant consequences for the technology sector, particularly for Microsoft.
Google had aimed to acquire the Israeli cybersecurity firm Wiz for $23 billion, but the company turned down the offer on Tuesday. Wiz’s CEO, Assaf Rappaport, described the choice as difficult but necessary for the company’s future growth, focusing on achieving $1 billion in annual revenue and pursuing an initial public offering (IPO).
The acquisition would have strengthened Google’s cybersecurity offerings at a time when the industry was rattled by a substantial outage from CrowdStrike, a major player in the field, just last week. Dan Ives, an analyst at Wedbush, noted that concerns from investors and antitrust challenges were pivotal in the deal’s collapse. Google has faced increased scrutiny over antitrust issues and recently concluded a trial stemming from a major investigation by the Department of Justice.
Ives stated in a communication to investors that the fallout from this failed acquisition would ripple through the cybersecurity sector. He expressed expectation that Google would continue to intensify its efforts to expand its cybersecurity capabilities despite losing the Wiz acquisition opportunity. Similarly, he believes Microsoft may take this chance to enhance its cybersecurity platform over the next year and a half.
Microsoft has recently come under scrutiny as well, following a widespread IT failure caused by a problematic update from CrowdStrike, which impacted its cybersecurity services. Users globally reported issues, including system crashes, affecting businesses and crucial operations.
Despite Ives labeling CrowdStrike as the “gold standard” in cybersecurity, the outage may indicate that Microsoft should strengthen its cybersecurity initiatives, and the termination of the Wiz deal could further facilitate this shift.