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The article delves into Perplexity's audacious $34.5 billion bid to acquire Google Chrome, a move that underscores the escalating browser wars fueled by the rise of artificial intelligence. This unsolicited offer arrives at a critical juncture, as a US court deliberates whether to compel Google to divest its widely used web browser as a remedy in an antitrust case it lost the previous year. While Google's parent company, Alphabet, has seen its share price remain stable, suggesting investor skepticism towards Perplexity's offer, the bid's significance lies in its targeting of a key Google asset amidst growing regulatory pressure to break up the tech behemoth. The hefty price tag further highlights the growing strategic value of web browsers in the age of AI, where user behavior is rapidly evolving. Perplexity, a generative AI-powered search startup, has positioned itself as a direct competitor to Google. Having recently closed a $100 million funding round at an $18 billion valuation, the company's offer to buy Chrome for nearly twice its own worth has been met with considerable skepticism. Perplexity has stated that it will seek external investors to finance the $34.5 billion bid and has pledged to invest $3 billion in Chrome and its infrastructure over the next two years. However, the realization of this deal hinges on a favorable ruling by the US district court in favor of the Department of Justice (DOJ), which is advocating for Google to spin off Chrome as part of the antitrust remedies. The DOJ's proposed remedies also include prohibiting Google from entering into exclusive search deals with smartphone makers and browser developers, aiming to level the playing field for competitors. A notable example is Google's reported annual payment of over $20 billion to Apple to make Google Search the default search engine on iPhones. Another proposed remedy involves making Google Search more interoperable, granting access to valuable search data such as ranking signals and query data to competitors at a marginal cost. Google, in its defense, argues that breaking off Chrome would be detrimental to the browser, potentially rendering it insecure and obsolete. Instead, Google proposes allowing smartphone makers and browser developers to have multiple default search agreements. With a ruling from Judge Mehta anticipated this month, the situation has created an opportunity for AI companies like Perplexity to challenge Google's dominance in search by attempting to acquire Chrome. The emergence of AI native browsers like Perplexity Comet challenges the status quo.
The strategic rationale behind AI companies' interest in web browsers stems from a fundamental shift in user behavior. Increasingly, individuals are turning to AI chatbots like ChatGPT instead of traditional search engines to find information online. Eddy Cue, a senior Apple executive, testified that search volume on Safari had declined for the first time in 22 years, attributing this drop to the rise of AI chatbots. However, AI chatbots lack the user context provided by traditional web browsers, such as insights into online activity like reading articles, writing emails, and online shopping. Tech startups like Perplexity, The Browser Company, and even OpenAI are seeking to bridge this gap by developing AI native web browsers, where the traditional search bar is replaced by an AI chatbot or agent. Google is also experimenting with Gemini integration in Chrome. Perplexity's Comet browser, available to Pro subscribers in the US, exemplifies this trend. Comet relies on an AI agent to respond to user queries with links to relevant websites, offering advanced features such as the ability to describe images on a user's screen or conduct in-depth research on a specific topic. Users can also instruct the AI agent within Comet to autonomously perform tasks like sending emails or posting on social media. Perplexity is reportedly engaged in discussions with smartphone manufacturers to pre-install its Comet AI mobile browser on devices. The appeal of Google Chrome for Perplexity lies primarily in its vast distribution. Chrome holds a commanding market share of 70% in the global desktop browser market and 67% in the mobile browser market, boasting an estimated 3.5 to 4 billion users worldwide, according to the DOJ. While Chrome's business model is not inherently lucrative, it serves as a crucial component of Google's search ecosystem, gathering data that enhances its search engine's relevance and enables targeted advertising. Chrome could also provide Perplexity with a direct channel to showcase its AI products, allowing users to experience their capabilities without actively seeking them out.
The potential acquisition of Chrome has also attracted interest from other AI companies. Nick Turley, the product head of OpenAI's ChatGPT, testified that OpenAI would be interested in acquiring Chrome, potentially extending the reach of its AI chatbot to a wider audience. Brian Provost, Yahoo's general manager for search, also expressed interest in buying Chrome with the support of its parent firm, Apollo Global Management. However, large tech companies such as Apple, Microsoft, Meta, and Amazon are unlikely to pursue Chrome due to potential antitrust concerns. In conclusion, Perplexity's bid for Chrome represents a bold move to challenge Google's dominance in the search and browser market. The outcome of this bid, along with the DOJ's antitrust case against Google, will have significant implications for the future of the web browser landscape and the role of AI in shaping online user experiences. The rise of AI native browsers signals a fundamental shift in how users interact with the internet, and companies that can effectively integrate AI into the browsing experience are poised to gain a competitive advantage. The browser wars are far from over, and the coming years will likely witness further innovation and competition as companies vie for dominance in this rapidly evolving market. The question remains whether Google will be able to maintain its stronghold on the browser market or whether it will be forced to relinquish control of Chrome, potentially opening the door for new players to emerge and disrupt the status quo. The impact of this will be felt by consumers, developers, and the entire internet ecosystem. Perplexity's offer, even if ultimately unsuccessful, has served as a catalyst for this discussion and has highlighted the strategic importance of web browsers in the age of AI. The future of browsing is undoubtedly intertwined with the future of AI, and the companies that can best harness the power of AI to enhance the user experience will be the ones that ultimately succeed in this new era.
Source: Perplexity’s $34.5B Chrome bid: How AI is fueling the next browser wars