Wiz’s decision to back out of a lucrative acquisition deal with Google could significantly affect Microsoft, according to industry analysts.
Originally, Google aimed to acquire the Israeli cybersecurity company Wiz for $23 billion, but Wiz CEO Assaf Rappaport announced on Tuesday that the company would not proceed with the offer. Rappaport described the choice as “tough,” stating that Wiz prefers to focus on its growth toward achieving $1 billion in annual revenue and eventually going public.
The proposed acquisition was seen as a means to enhance Google’s cybersecurity capabilities, particularly following a major outage involving cybersecurity firm CrowdStrike that affected the industry last week. Analyst Dan Ives from Wedbush noted that concerns regarding investors and antitrust regulations were likely contributors to the collapse of the deal. Google has faced significant antitrust scrutiny recently and concluded a trial related to one of two major cases from the Department of Justice.
Ives believes that the failure of the Wiz deal will have broader implications throughout the tech sector. He suggested that Google would continue to pursue growth in its cybersecurity division, a sentiment mirrored by Microsoft.
“Consolidation is overdue in the cybersecurity sector, and we expect Microsoft to explore options for enhancing its cybersecurity offerings within the next 12 to 18 months,” Ives stated.
Microsoft encountered negative attention following a widespread IT outage caused by a flawed update to its cybersecurity software from CrowdStrike, which affected users globally and disrupted various operations including businesses, flights, and government services. Ives acknowledged CrowdStrike’s status as the “gold standard” in cybersecurity, but the recent incident raises questions regarding Microsoft’s cybersecurity measures. With Google’s failed acquisition, there may be increased opportunities for Microsoft to strengthen its position in this critical area.