Cloud security company Wiz, which was rumored to be in a $23 billion deal to be bought by Google parent Alphabet, Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG), has reportedly walked away and has instead chosen to take the initial public offering route. A bullish tech analyst on Tuesday commented on the development and its implications for the industry.

What Happened: Antitrust issues, a run-in with the Federal Trade Commission and its commissioner Lina Khan, may have been one of the potential reasons for the deal falling out, said Wedbush's Daniel Ives in a note. Investors' concerns may also have impacted the decision, he added.

Wiz co-founder Assaf Rappaport said in an internal email to employees that the company will now focus on hitting its next milestones, namely an IPO and achieving an annual recurring revenue run-rate of $1 billion, CNBC reported.

Why It's Important: Wiz's decision comes in the aftermath of a recent massive outage in Microsoft systems and software triggered by an update by CrowdStrike Holdings, Inc. (NASDAQ:CRWD). The outage impacted the operations of airlines, media, and essential services, among others across the globe.

CrowdStrike stepped in to minimize the damage by applying a fix and even as things are returning to normal, fears regarding similar occurrences are at the forefront.

What's Next: Ives said he sees ripple impacts of the failed deal across the sector. Google will still want to double down on cybersecurity and the cloud shift has only accelerated this potential strategic move, he said.

"We also believe for Microsoft as well as Google and Amazon, Inc. (NASDAQ:AMZN), the CrowdStrike disaster outage since Friday has further highlighted the interconnected nature of cyber security software and the cloud ecosystem," he added.

Ives sees the start of an M&A cycle in the space as large cloud and tech stalwarts look to acquire cybersecurity software within their broader product portfolio.

"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 along with Google looking for other candidates on both the public/private cyber security vendor front," he said.

Microsoft share rose 0.20% to $443.84 in early trading Tuesday, according to Benzinga Pro data, while Alphabet climbed 0.48% to $182.54.

• Microsoft Stock Has Further Room To Run, Says Analyst, As Software Giant Remains On Track To Hit $200B Cloud Revenue In 2 Years
  Photo: Song_about_summer/Shutterstock