Google Risks Losing Chrome as Perplexity Bid Intensifies Breakup Debate

Perplexity AI’s Bid on Google Chrome and Implications for Alphabet

Perplexity AI’s $34.5 billion bid to acquire Google’s Chrome browser on Tuesday marks a dramatic and historic moment for the internet search giant, coming just a week before Google celebrates the 20th anniversary of its initial public offering (IPO). While analysts may not be treating the offer as highly serious, the move is significant because it represents the first time an external party has made a public and concrete attempt to acquire a core part of Google. This development comes at a time when Google awaits a judge’s decision on whether it must implement substantial divestitures following a ruling last year that declared the company holds a monopoly in its core search market.

The antitrust ruling has been widely regarded as the most important in the technology sector since the Microsoft case more than two decades ago. The U.S. Department of Justice (DOJ), which filed the landmark case against Google in 2020, indicated after winning in court that it might consider a breakup of Google as a remedy for its antitrust violations. The DOJ explicitly recommended that Google divest Chrome to create a more level playing field for search competitors. Currently, Google bundles search and other services into Chrome and preinstalls the browser on Chromebooks, a practice the DOJ sees as anti-competitive. Google’s Chief Legal Officer, Kent Walker, has argued that divesting Chrome would constitute unprecedented government overreach and harm U.S. economic and technological leadership.

Investors are closely monitoring the upcoming remedies decision, which is expected this month, as it could significantly impact the future valuation of Google and its parent company, Alphabet. Alphabet continues to invest heavily in artificial intelligence infrastructure and AI services, spending tens of billions of dollars annually. This is in response to growing competition from AI-powered alternatives, such as ChatGPT, which may reduce users’ reliance on traditional search engines. While search-related advertising still represents the majority of Alphabet’s revenue, the company has diversified its operations over the past decade. Alphabet itself was created ten years ago as a holding company, with Google as its flagship subsidiary. Co-founder Larry Page noted that this structure allows the company to focus on opportunities within Google while maintaining overall strategic flexibility.

Leadership changes have shaped Alphabet’s current trajectory. Larry Page transitioned from Google CEO to Alphabet CEO, promoting Sundar Pichai to lead Google. Four years later, Pichai replaced Page as Alphabet’s CEO. Under Pichai’s leadership, Alphabet’s market capitalization has risen over 150% to approximately $2.5 trillion. As Google and Alphabet maintain a dominant position in the internet ecosystem, the leadership team continues to explore growth areas, particularly in AI, while navigating regulatory pressures from both U.S. and European authorities.

Analysts have used the Perplexity bid and antitrust context to estimate the value of Alphabet’s various businesses, partly as a hypothetical exercise in case drastic measures, such as a forced breakup, occur. Some analysts argue that a full divestiture could benefit shareholders, allowing them to directly own the businesses they value most. D.A. Davidson analysts have suggested that a complete breakup may be the most effective way forward for Alphabet.

As of now, Alphabet has not issued a response or comment regarding Perplexity AI’s offer, leaving investors and market watchers to speculate on potential outcomes and the broader implications for the company, its shareholders, and the global tech landscape.