Wiz’s decision to withdraw from a proposed acquisition by Google could have significant consequences for the technology sector, particularly for Microsoft.
Google intended to acquire the Israeli cybersecurity startup Wiz for $23 billion, but the company opted to decline the offer. Wiz’s CEO, Assaf Rappaport, explained that he made the challenging choice to reject the substantial bid to focus on growing Wiz towards achieving $1 billion in annual revenue and preparing for an eventual IPO.
This acquisition would have strengthened Google’s cybersecurity division, especially following a recent major outage attributed to the cybersecurity giant CrowdStrike. Analyst Dan Ives from Wedbush suggested that investor apprehensions and antitrust concerns were key factors that led to the deal’s collapse. Google has faced considerable antitrust scrutiny and is currently involved in two significant legal cases initiated by the Department of Justice.
Ives indicated that the failure of this deal will result in widespread effects in the industry. He anticipates that Google will continue to invest heavily in expanding its cybersecurity capabilities, a path that will likely be mirrored by Microsoft.
Ives noted, “Consolidation is overdue in the cybersecurity sector,” predicting that Microsoft may seek to enhance its cybersecurity offerings in the next 12 to 18 months. The recent global IT outage caused by an issue with CrowdStrike’s cybersecurity software put Microsoft under scrutiny, as users encountered system failures. Although Ives maintains that CrowdStrike remains the leader in cybersecurity, the outage suggests an opportunity for Microsoft to strengthen its own cybersecurity business, especially with the collapse of Google’s planned acquisition of Wiz.