Perplexity offers $34.5B for Google Chrome amid antitrust case

In the wake of a significant antitrust defeat, Google could soon face a court-mandated divestiture of one of its most prized assets: the Chrome browser. Among the proposed remedies in the government’s search case is a requirement that Google sell off its market-leading browser, and Perplexity, an AI-powered search firm, has swiftly entered the fray with an audacious $34.5 billion offer. The immediate challenge, however, is that Perplexity’s current financial standing is nowhere near that figure.

Perplexity has undeniably capitalized on the artificial intelligence boom, with its AI-driven search capabilities integrated into smartphones and its proprietary Comet browser. Like many companies operating in the AI space, Perplexity has attracted substantial investor interest, accumulating approximately $1 billion in funding to date and achieving a current valuation of around $14 billion. This begs the question of how the company could possibly muster an offer more than twice its total valuation to acquire Chrome. The answer lies in the sheer volume of capital currently circulating within the AI investment sphere. Reports indicate that Perplexity’s all-cash offer is backed by various venture funds, though the company has yet to disclose specific details of this financial arrangement.

Throughout the remedy phase of the antitrust trial this past spring, numerous Google competitors testified, openly expressing their interest in acquiring Chrome. For instance, an executive from OpenAI pledged to transform Chrome into an “AI-first experience” should their firm succeed in purchasing it. Such testimonies effectively undermined Google’s assertion that no other industry player possessed the capacity to manage the browser effectively.

Google, for its part, has vehemently opposed the government’s proposed divestment of Chrome, labeling it a “radical interventionist agenda.” The company emphasizes that Chrome is not merely a browser but also an open-source project known as Chromium, which serves as the foundation for numerous non-Google browsers, including Microsoft Edge. Perplexity’s offer thoughtfully addresses this, including a $3 billion allocation over two years specifically for running Chromium. Furthermore, Perplexity has reportedly pledged to maintain Chromium as a fully open-source project and to refrain from enforcing changes to the browser’s default search engine.

The tech world now awaits United States District Court Judge Amit Mehta’s ruling on the remedies in the case, which could arrive as early as this month. Perplexity’s unsolicited offer is therefore timely, though the path to a potential sale remains fraught with complexities. There is no indication that Google would readily accept Perplexity’s bid, even if a sale is mandated. Should the court compel a divestiture, Google would likely command a far higher price than Perplexity’s current offer. During the trial, DuckDuckGo’s CEO suggested a price point of around $50 billion, while other estimates have soared into the hundreds of billions. Nevertheless, the immense volume of user data flowing to Chrome’s owner is invaluable for developing new AI technologies, meaning any sale price would likely represent a net strategic loss for Google.

Should Judge Mehta decide to force a sale, the decision will undoubtedly trigger legal challenges that could take months or even years to resolve. Even if these legal maneuvers fail, any potential buyer is likely to face opposition. Many users might be uneasy with the prospect of an AI startup or a consortium of venture capital firms owning Chrome. While Google has been collecting user data via Chrome for years, it is, in a sense, the “devil we know.”