Wiz’s decision to back out of a substantial acquisition deal with Google has significant implications for the tech industry, particularly Microsoft.
Google was in discussions to acquire the Israeli cybersecurity startup Wiz for $23 billion. However, on Tuesday, Wiz’s CEO Assaf Rappaport announced the company’s decision to reject the offer, stating that continuing to develop Wiz towards achieving $1 billion in annual revenue and preparing for an IPO was a more strategic choice.
This acquisition would have enhanced Google’s cybersecurity capabilities, especially following a recent major outage attributed to CrowdStrike, a key player in the industry. Dan Ives, an analyst at Wedbush, noted that investor concerns and ongoing antitrust scrutiny were detrimental factors leading to the deal’s collapse. Google has faced intense examination from antitrust regulators and recently concluded a trial related to these issues.
Ives mentioned in an email to investors that the failure of the Wiz deal would have ripple effects across the sector. He believes Google will persist in expanding its cybersecurity initiatives, a move that Microsoft is also likely to pursue.
Ives highlighted that consolidation within the cybersecurity sector is necessary and anticipated Microsoft to potentially seek to enhance its own cybersecurity offerings over the next year to year and a half.
Additionally, Microsoft faced criticism following a global IT outage caused by an update to its cybersecurity software provided by CrowdStrike, which affected various sectors worldwide and resulted in reports of system failures. Despite acknowledging that CrowdStrike remains a leader in cybersecurity, the incident suggests that Microsoft may need to strengthen its cybersecurity framework, and the collapse of Google’s deal with Wiz further opens the door for this expansion.