Wiz’s decision to back out of a proposed acquisition deal with Google could significantly impact the technology sector, particularly for Microsoft.
Google had aimed to purchase the Israeli cybersecurity startup Wiz for $23 billion, but on Tuesday, Wiz’s CEO Assaf Rappaport announced they would not proceed with the offer. Rappaport described the choice as “tough,” emphasizing the company’s commitment to achieving $1 billion in annual revenue and preparing for a public offering.
This deal would have strengthened Google’s cybersecurity capabilities, especially following a major outage that affected many companies, caused by cybersecurity giant CrowdStrike. Wedbush analyst Dan Ives noted that investor apprehension and ongoing antitrust challenges were key factors leading to the deal’s collapse. Google has faced heightened scrutiny over antitrust issues in recent years and has recently concluded a trial stemming from one of two significant cases brought by the Department of Justice.
Ives indicated that the failure of this acquisition would have broader implications across the technology sector. He suggested that Google will likely continue to build out its cybersecurity strategy despite losing the Wiz deal, a trend expected to be mirrored by Microsoft.
Ives mentioned that there is an urgent need for consolidation within the cybersecurity industry, hinting that Microsoft may look to enhance its cybersecurity portfolio in the next year to 18 months. This comes after Microsoft faced criticism due to a global IT outage linked to a problematic update in its cybersecurity software from CrowdStrike. Users reported widespread issues, including the infamous “blue screens of death,” disrupting various operations globally.
Although Ives maintains that CrowdStrike remains a leader in cybersecurity, the recent outages highlight the necessity for Microsoft to strengthen its cybersecurity offerings, and the untethered Wiz deal only adds to this need.