Wiz’s decision to back out of a significant acquisition deal with Google could have major consequences for the tech sector, particularly impacting Microsoft.
The Israeli cybersecurity startup had been on track to be acquired by Google for $23 billion, but on Tuesday, Wiz CEO Assaf Rappaport announced the rejection of the offer. Rappaport explained that turning down this substantial sum was a difficult choice aimed at focusing on growing Wiz to reach $1 billion in annual revenue and preparing for an initial public offering.
This acquisition would have strengthened Google’s cybersecurity capabilities at a time when the industry faced turmoil due to a large outage caused by cybersecurity firm CrowdStrike last week. Analyst Dan Ives from Wedbush pointed out in a research note that concerns from investors and existing antitrust issues ultimately led to the deal’s collapse. Google has recently faced intense antitrust scrutiny, culminating in its trial related to one of two significant cases from the Department of Justice.
Ives noted that the inability to complete this transaction would likely have ripple effects across the tech industry. Despite the setback with Wiz, he anticipates that Google will continue to aggressively expand its presence in cybersecurity, a strategy that may also be mirrored by its competitor, Microsoft.
The analyst suggested that the cybersecurity sector is ripe for consolidation and expects Microsoft to seek opportunities to enhance its cybersecurity platform in the next 12 to 18 months. Microsoft’s recent exposure came during a widespread global IT outage linked to a problematic update from CrowdStrike, which disrupted various operations worldwide. While Ives maintains that CrowdStrike remains a top player in cybersecurity, the outage serves as a reminder that Microsoft may need to strengthen its own cybersecurity measures, especially following the collapse of the Wiz deal.