Wiz’s decision to back out of a significant acquisition deal with Google could greatly impact the technology industry, particularly Microsoft.
Google intended to purchase the Israeli cybersecurity startup Wiz for $23 billion, but on Tuesday, Wiz declined the offer. CEO Assaf Rappaport explained that the choice was challenging but necessary, as the company aims to grow towards achieving $1 billion in annual revenue and preparing for an IPO.
This acquisition would have strengthened Google’s cybersecurity division, especially following a major outage caused by CrowdStrike, a key player in the industry, at the end of last week. Dan Ives, an analyst at Wedbush, noted in a research report that concerns from investors and ongoing antitrust investigations contributed to the collapse of the deal. Google has faced increasing scrutiny over antitrust issues and recently concluded a trial related to one of two significant cases brought by the Department of Justice.
Ives mentioned that the failed deal would likely have ripple effects throughout the sector. He anticipates Google will persist in expanding its cybersecurity initiatives despite the unsuccessful acquisition of Wiz, and he believes Microsoft is also set to pursue similar strategies.
Ives stated, “We believe consolidation is overdue in the cybersecurity sector and we would expect Microsoft to potentially go down this path and look to beef up its own cybersecurity platform over the coming 12 to 18 months.”
Microsoft recently found itself under scrutiny following a widespread global IT outage attributed to a faulty update in its cybersecurity software provided by CrowdStrike. Users reported encountering the notorious “blue screens of death,” and the disruption affected various sectors, including businesses, flights, and government operations.
While Ives regards CrowdStrike as the “gold standard” in cybersecurity, the recent incident may signal that Microsoft needs to enhance its cybersecurity capabilities, further opening a pathway for potential growth in this area following Google’s abandoned deal.