Wiz’s decision to back out of a significant acquisition deal with Google could have major consequences for the technology sector, particularly for Microsoft.
Initially, Google was attempting to purchase the Israeli cybersecurity startup Wiz for $23 billion. However, Wiz’s CEO Assaf Rappaport announced on Tuesday that he turned down the lucrative offer, opting instead to focus on growing Wiz with the goal of achieving $1 billion in annual revenue and preparing for a future initial public offering (IPO).
This acquisition would have strengthened Google’s cybersecurity efforts, especially following a substantial service disruption caused by CrowdStrike, a leading cybersecurity firm, last week. Analyst Dan Ives from Wedbush highlighted that concerns among investors and ongoing antitrust investigations likely contributed to the deal’s collapse. Google has faced rigorous antitrust scrutiny and recently concluded a trial linked to one of two major cases from the Department of Justice.
In an email to investors, Ives expressed that the failure of this deal could lead to significant effects throughout the industry. He speculated that Google will likely continue to intensify its cybersecurity initiatives despite the setback with Wiz, a trend that Microsoft may also pursue.
Ives emphasized that a consolidation in the cybersecurity industry is overdue, suggesting that Microsoft might explore opportunities to enhance its cybersecurity platform within the next year or so.
The urgency for stronger cybersecurity solutions at Microsoft was underscored by a recent global IT outage caused by a flawed update from CrowdStrike, which impacted Microsoft users worldwide. Despite the outage, Ives maintains that CrowdStrike remains the benchmark for cybersecurity, indicating that the failed acquisition of Wiz may create an opportunity for Microsoft to strengthen its position in the cybersecurity market.