Wiz’s decision to back out of a potential acquisition by Google could have significant repercussions for Microsoft, according to analysts.
In what would have been Google’s largest acquisition to date, the tech giant aimed to purchase Israeli cybersecurity startup Wiz for $23 billion. However, Wiz CEO Assaf Rappaport announced on Tuesday that the company has opted to decline the offer, choosing instead to focus on developing its business to reach an annual revenue goal of $1 billion and preparing for an initial public offering.
This acquisition, had it gone through, would have strengthened Google’s cybersecurity offerings, especially following a recent major outage involving industry leader CrowdStrike. In a research note addressing the failed deal, Wedbush analyst Dan Ives highlighted that investor apprehensions and ongoing antitrust concerns were significant factors in the deal’s collapse. Google has faced heightened scrutiny regarding antitrust issues and has recently concluded its trial concerning one of two key cases initiated by the Department of Justice.
Ives noted the broader implications of the failed acquisition, stating that it would likely create ripple effects throughout the tech sector. He suggested that Google would continue to focus on expanding its cybersecurity division despite the deal’s failure, and anticipates that Microsoft will take similar steps.
Ives remarked, “We believe consolidation is overdue in the cybersecurity space, and we would expect Microsoft to pursue opportunities to enhance its own cybersecurity platform in the next 12 to 18 months.”
The cybersecurity landscape was recently highlighted for Microsoft due to a global IT outage caused by a flawed update from CrowdStrike. This incident raised concerns as Microsoft relies on CrowdStrike’s capabilities to safeguard its Windows systems. Users reported widespread issues, including the infamous “blue screens of death,” which disrupted not only businesses but also flights and government functions.
Despite the challenges, Ives maintains that CrowdStrike remains a leader in the cybersecurity field, indicating that the recent outage underscores the necessity for Microsoft to strengthen its cybersecurity initiatives, further intensified by Google’s unfulfilled acquisition intentions.