Wiz’s decision to back out of Google’s acquisition could significantly impact Microsoft and the broader technology industry, according to analysts.
Google had planned to acquire Israeli cybersecurity firm Wiz for $23 billion, but Wiz CEO Assaf Rappaport announced on Tuesday that the company would decline the offer. Rappaport explained that the decision, though difficult, was made in pursuit of long-term growth, aiming for Wiz to generate $1 billion in annual revenue and eventually pursue an initial public offering.
This acquisition would have strengthened Google’s cybersecurity segment, especially following a recent significant outage caused by CrowdStrike, a major player in the industry. Wedbush analyst Dan Ives noted that investor apprehensions and ongoing antitrust issues surrounding Google likely contributed to the deal’s collapse. Google is currently under intense scrutiny for antitrust practices and recently concluded a trial related to one of two significant cases brought forth by the Department of Justice.
Ives indicated that the failure of the Wiz acquisition could create ripple effects throughout the tech sector. He mentioned that Google will likely intensify its focus on expanding its cybersecurity initiatives despite the unsuccessful deal, a sentiment that could apply to its competitor Microsoft as well.
Ives further pointed out that consolidation in the cybersecurity field is overdue, suggesting that Microsoft may seek to enhance its own cybersecurity platforms in the next 12 to 18 months.
The recent global IT outage, linked to a problematic update from CrowdStrike—whose services are utilized by Microsoft—put the tech giant in a challenging position. Users around the world reported encountering the notorious “blue screens of death,” significantly disrupting businesses, flights, and government operations.
Despite the setback, Ives labeled CrowdStrike as the “gold standard” in cybersecurity, yet the outage underscores the need for Microsoft to strengthen its cybersecurity offerings, a necessity that the failure of the Google-Wiz deal may further emphasize.