Wiz’s decision to back out of a potential acquisition by Google could have significant repercussions for the tech industry, particularly for Microsoft.
The proposed $23 billion deal, which would have marked Google’s largest acquisition, fell through when Wiz’s CEO Assaf Rappaport opted to reject the offer. Rappaport stated that the difficult choice was made to focus on growing Wiz towards achieving $1 billion in annual revenue and pursuing an initial public offering (IPO).
This acquisition would have enhanced Google’s cybersecurity operations shortly after a major setback in the industry, marked by an extensive outage involving cybersecurity firm CrowdStrike. Analyst Dan Ives from Wedbush highlighted that investor concerns and ongoing antitrust scrutiny were pivotal in the collapse of the deal. Google has faced significant antitrust challenges in recent years and recently concluded a trial related to one of two major cases brought by the Department of Justice.
Ives noted that the ramifications of this deal not materializing would reverberate across the industry. He anticipates that Google will persist in its efforts to expand its cybersecurity presence, a sentiment shared by its competitor Microsoft.
Ives also remarked that there is a pressing need for consolidation within the cybersecurity sector, suggesting that Microsoft may explore opportunities to strengthen its cybersecurity platform in the upcoming 12 to 18 months.
The urgency for Microsoft to enhance its cybersecurity capabilities has been underscored by a recent widespread IT outage linked to a faulty update in CrowdStrike’s software, which had a significant impact on users globally. Despite Ives labeling CrowdStrike as the industry’s “gold standard,” this incident indicates the necessity for Microsoft to bolster its own cybersecurity strategy, with the collapse of the Google-Wiz deal potentially paving the way for further developments.