Wiz’s decision to back out of a deal with Google could have significant ramifications for the tech industry, particularly affecting Microsoft.
Google had approached the Israeli cybersecurity startup Wiz with a $23 billion acquisition proposal, but the company rejected the offer. Wiz CEO Assaf Rappaport described the decision as “tough,” emphasizing the desire to focus on driving Wiz toward $1 billion in annual revenue and preparing for an initial public offering (IPO).
The acquisition would have enhanced Google’s cybersecurity capabilities, especially following a recent major outage caused by CrowdStrike, a significant player in the cybersecurity space. Analyst Dan Ives from Wedbush pointed out that concerns from investors and ongoing antitrust issues contributed to the breakdown of the deal. Google has faced intense scrutiny regarding antitrust matters and recently concluded a trial concerning one of its major cases presented by the Department of Justice.
Ives noted in an email to investors that the failure of the deal would likely create ripple effects throughout the cybersecurity sector. He believes Google will still focus on expanding its cybersecurity efforts, a path Microsoft is expected to follow as well.
Ives suggested that consolidation is overdue in the cybersecurity market, and Microsoft may seek to enhance its own cybersecurity offerings in the next 12 to 18 months. This comes after Microsoft faced challenges during a significant global IT outage linked to a faulty update from CrowdStrike, which is used to protect Microsoft’s Windows operating systems. The outage led to widespread reports of system failures and disrupted various sectors, including business operations and government activities.
While Ives continues to regard CrowdStrike as the “gold standard” in cybersecurity, the incident underscores the necessity for Microsoft to strengthen its cybersecurity portfolio, especially in light of Google’s failed acquisition attempt.