Wiz’s decision to back out of a significant acquisition with Google may carry substantial consequences for the tech sector, particularly for Microsoft. The Israeli cybersecurity startup Wiz had been in talks for Google to acquire it for $23 billion, but CEO Assaf Rappaport announced on Tuesday that they have opted to decline this offer in order to focus on growing the company toward its goal of achieving $1 billion in annual revenue and an initial public offering.
This acquisition would have enhanced Google’s presence in cybersecurity, especially following a recent large-scale outage from industry player CrowdStrike that raised concerns in the sector. Analyst Dan Ives from Wedbush pointed out that apprehensions from investors and ongoing antitrust challenges contributed to the deal’s collapse. Google has faced significant antitrust scrutiny and recently concluded a trial regarding one of two major cases brought against it by the Department of Justice.
Ives noted that the failure of this acquisition could have widespread effects across the cybersecurity landscape. He suggested that Google will likely persist in expanding its cybersecurity capabilities despite losing the Wiz opportunity, a sentiment that also applies to Microsoft.
Ives highlighted that consolidation within the cybersecurity industry is overdue and anticipated that Microsoft might pursue its own strategies to enhance its cybersecurity platform in the next 12 to 18 months. Microsoft has been under scrutiny after the recent global IT outage caused by a problematic update from CrowdStrike, which impacted a multitude of businesses, flights, and government services worldwide. While Ives referred to CrowdStrike as the “gold standard” of cybersecurity, he emphasized that this incident may prompt Microsoft to reinforce its cybersecurity measures, with the failure of the Google-Wiz deal providing further impetus.