Wiz’s decision to decline Google’s acquisition offer may have significant repercussions for the technology sector, especially for Microsoft.
Google had proposed acquiring the Israeli cybersecurity firm Wiz for $23 billion, but the offer was rejected on Tuesday. Wiz’s CEO Assaf Rappaport stated that the difficult choice was made to focus on growing the company towards generating $1 billion in annual revenue and preparing for an IPO.
The acquisition would have strengthened Google’s cybersecurity division, especially following a recent significant disruption caused by CrowdStrike, a major player in the industry. According to Wedbush analyst Dan Ives, investor apprehensions and antitrust considerations led to the breakdown of the deal. Google has faced intense scrutiny over antitrust issues, recently concluding a trial related to one of two significant cases initiated by the Department of Justice.
Ives conveyed in a note to investors that the failure of this deal could trigger ripple effects throughout the sector. He believes Google will likely intensify its efforts to expand its cybersecurity presence despite the setback with Wiz. Microsoft is expected to follow a similar path.
Ives noted that consolidation is needed in the cybersecurity industry, anticipating that Microsoft will seek to enhance its cybersecurity platform over the next 12 to 18 months. Microsoft faced scrutiny after a widespread global IT failure linked to a faulty update from CrowdStrike, which resulted in significant disruptions across various sectors, including businesses, airlines, and government operations. This incident suggests that Microsoft may need to strengthen its cybersecurity offerings even further, and the collapse of the Google-Wiz deal enhances that opportunity.