Wiz’s decision to back out of a substantial acquisition deal with Google is anticipated to have significant implications for the tech sector, particularly for Microsoft.
Google had aimed to acquire the Israeli cybersecurity startup Wiz for $23 billion, but Wiz’s CEO Assaf Rappaport announced on Tuesday that the offer was declined. Rappaport described the decision as “tough,” emphasizing the company’s commitment to achieving $1 billion in annual revenue and pursuing an initial public offering (IPO).
Had the acquisition proceeded, it would have strengthened Google’s cybersecurity division, especially following a recent major outage linked to CrowdStrike, a significant player in the industry. Analyst Dan Ives from Wedbush noted in a research report that concerns about investors and ongoing antitrust challenges contributed to the collapse of the deal. Google is currently facing heightened scrutiny in antitrust matters, recently concluding a trial related to one of two significant cases brought by the Department of Justice.
Ives remarked that the failed acquisition is likely to have wider repercussions throughout the cybersecurity industry. He suggested that Google will still seek to enhance its cybersecurity capabilities, which will likely prompt competitors like Microsoft to do the same.
Ives further stated, “We believe consolidation is overdue in the cybersecurity sector and we would expect Microsoft to potentially pursue this path to strengthen its own cybersecurity platform within the next year to 18 months.”
Microsoft’s role in the aftermath of a recent widespread IT outage, attributed to an error in its cybersecurity software from CrowdStrike, has amplified the urgency to bolster its cybersecurity measures. Users globally have reported disruptions, including the infamous “blue screens of death,” affecting businesses, flights, and government operations. Although Ives maintains CrowdStrike as a leading force in cybersecurity, the outage indicates a critical opportunity for Microsoft to enhance its own offerings against a backdrop of Google’s abandoned acquisition.