Wiz’s decision to back out of a significant acquisition deal with Google may have substantial consequences for Microsoft and the tech sector as a whole.
Google was in talks to purchase the Israeli cybersecurity company Wiz for $23 billion, but on Tuesday, Wiz CEO Assaf Rappaport announced the company would not accept the offer. Rappaport explained that this difficult decision was made to focus on building Wiz toward generating $1 billion in annual revenue and eventually going public.
This acquisition would have enhanced Google’s cybersecurity capabilities, particularly following a recent significant outage linked to CrowdStrike, a major player in the industry. Analyst Dan Ives of Wedbush suggested that concerns among investors and ongoing antitrust challenges played a role in the deal’s collapse. Google has faced increasing scrutiny from regulators and recently concluded a trial related to one of two major antitrust cases brought by the Department of Justice.
Ives noted that the failure of the Wiz deal could have ripple effects across the technology sector. He anticipates that Google will intensify efforts to grow its cybersecurity presence despite the setback, a trend likely to be mirrored by Microsoft.
Ives highlighted that the cybersecurity sector is overdue for consolidation, suggesting Microsoft’s potential interest in enhancing its own cybersecurity services over the next year to eighteen months. This comes after Microsoft experienced negative press due to a global IT disruption caused by a flawed update from CrowdStrike, which impacted numerous businesses and governmental functions worldwide.
Despite Ives acknowledging CrowdStrike as a leading entity in the cybersecurity realm, the recent outage signals a pressing need for Microsoft to strengthen its cybersecurity strategies, with the collapse of the Google-Wiz deal possibly providing an opportunity for such advancements.