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What would have been Google’s largest acquisition is no more. And that will have big implications for the tech industry — namely, Microsoft.
The search giant had been looking to buy Israeli cybersecurity startup Wiz for $23 billion, but on Tuesday, Wiz rejected Google’s offer. Wiz CEO Assaf Rappaport said he made the “tough” decision to turn down the massive sum in order to continue building Wiz toward making $1 billion annually in revenue and an IPO.
The move would have bolstered Google’s cybersecurity business right after the cyber world was shaken by a massive outage caused by an industry giant, CrowdStrike, at the end of last week. Wedbush analyst Dan Ives said in a research note following the no-deal news that investor concerns and antitrust issues caused the deal to fall apart. Google has been the subject of intense antitrust scrutiny in recent years and just wrapped up its trial in one of two major cases from the Department of Justice.
“We believe there will be ripple impacts across the sector from this deal not happening,” Ives wrote in an email to investors. Ives said Google will likely continue to “double down” on expanding its cybersecurity footprint despite the dissipation of the Wiz deal. So will its rival Microsoft.
“We believe consolidation is overdue in the cyber security sector and we would expect Microsoft to potentially go down this path and look to beef up its own cyber security platform over the coming 12 to 18 months,” Ives wrote.
Microsoft was thrust into the spotlight — and not in a good way — during the pervasive global IT outage caused by a faulty update to its cybersecurity software provided by CrowdStrike on Friday. Microsoft’s Windows uses CrowdStrike to identify and prevent hackers from accessing its operating systems. Microsoft users around the world reported seeing its “little blue screens of death,” and the CrowdStrike outage disrupted businesses, flights, and government operations.
While Ives has said CrowdStrike is still the “gold standard” of cybersecurity, the outage may be a sign that Microsoft would do well to beef up its cybersecurity business, and Google’s failed deal only opens the door further.