Wiz’s decision to walk away from a significant acquisition deal with Google could have substantial repercussions for the tech industry, particularly for Microsoft.
Google had aimed to purchase the Israeli cybersecurity firm Wiz for $23 billion, but on Tuesday, Wiz CEO Assaf Rappaport announced the rejection of the offer. Rappaport indicated that the decision, albeit challenging, was made to allow Wiz to focus on achieving an annual revenue target of $1 billion and preparing for an initial public offering (IPO).
The acquisition would have strengthened Google’s cybersecurity division, especially following a major disruption in the sector caused by an outage involving CrowdStrike last week. Dan Ives, an analyst at Wedbush, noted in a research follow-up that investor skepticism and ongoing antitrust issues contributed to the collapse of the deal. Google has faced heightened antitrust scrutiny, culminating in a trial related to one of two significant cases brought forth by the Department of Justice.
Ives stated in an email to investors that the failed acquisition would likely have ripple effects across the tech sector. He suggested that Google would persist in enhancing its cybersecurity capabilities despite the setback with Wiz, a trend he anticipates Microsoft will follow as well.
Ives elaborated that consolidation in the cybersecurity sector is overdue, hinting that Microsoft might seek to enhance its cybersecurity offerings in the next 12 to 18 months. Microsoft recently faced negative attention due to a global IT outage tied to an update in its cybersecurity software from CrowdStrike. This disruption led to widespread reports of system failures and had significant implications for businesses, flights, and government functions worldwide.
Although Ives maintains that CrowdStrike remains a leading name in cybersecurity, the recent outage signals a need for Microsoft to strengthen its cybersecurity portfolio, and the collapse of the Google-Wiz deal may provide an opportunity for such enhancements.