Wiz’s decision to back out of a potential acquisition by Google, which would have been the company’s largest deal to date, could significantly impact the tech industry, particularly Microsoft.
The Israeli cybersecurity firm Wiz had been in discussions with Google for a $23 billion acquisition but ultimately opted to reject the offer. Wiz’s CEO, Assaf Rappaport, stated that turning down the substantial offer was a difficult choice aimed at focusing on growing the company toward an annual revenue target of $1 billion and preparing for an initial public offering.
The potential acquisition was intended to strengthen Google’s cybersecurity division, especially in light of a major outage caused by CrowdStrike, a leading cybersecurity firm, which occurred recently. Analyst Dan Ives from Wedbush noted in a research report that issues surrounding investor confidence and antitrust regulations were factors that led to the cancellation of the deal. Google has faced heightened antitrust scrutiny, culminating in a trial concerning one of two significant cases brought forth by the Department of Justice.
Ives pointed out that the fallout from this failed deal may have ripple effects throughout the tech sector. He anticipates that Google will persist in expanding its cybersecurity capabilities, and he believes Microsoft is likely to follow suit.
Ives suggested that consolidation within the cybersecurity sector is overdue and expected Microsoft to explore opportunities to enhance its cybersecurity platform in the next 12 to 18 months. Microsoft recently faced criticism due to a widespread outage linked to a faulty update to its software, which relies on CrowdStrike for security. This incident led to disruptions across multiple sectors, including business operations and government services globally.
Despite Ives labeling CrowdStrike as the “gold standard” in cybersecurity, the recent outage may indicate a pressing need for Microsoft to strengthen its cybersecurity offerings, and the termination of the Google-Wiz deal could further open avenues for such enhancements.