Perplexity AI startup aims to attract users away from Google by providing AI-powered search services.
Perplexity AI shocked the technology industry with a bold $34.5 billion all-cash bid to acquire Google Chrome, despite the browser not being officially for sale.
The AI startup made a formal offer to acquire Google’s Chrome browser for $34.5 billion, a bold move to position itself ahead of a potential requirement for the tech giant to divest its web browser amid ongoing US antitrust investigations.
The offer, which Perplexity plans to fund with the help of external investors, was sent to Alphabet Inc.’s Google on Tuesday morning, according to a spokesperson for Perplexity. This bid comes not long after its rival artificial intelligence company, OpenAI, also expressed interest in buying Chrome, the main software used by people to access the web on PCs, along with Chromium. It is an open-source project, meaning its source code is freely available for anyone to use, modify, and distribute.
Google chose not to comment on the situation. The company plans to appeal the judge’s decision that it illegally monopolised the search market, which may postpone a remedy for months or even years. The company also plans to challenge any verdict that calls for Chrome to be divested from Google and has suggested a more limited set of remedies that would modify its default search agreements with Apple, Mozilla, and Android to “open up” competition in the search market.
Shortly after the federal judge’s ruling last year, which found that the tech company maintains an illegal monopoly in internet searches, the US government expressed interest in Google selling its Chrome browser and sharing search data with its competitors, among other proposed changes. US District Judge Amit Mehta, who oversaw the case, is expected to issue a verdict shortly, along with remedies to prevent the company from monopolizing the online search market.
San Francisco-based AI startup aims to attract users away from Google by providing AI-powered search services. So earlier this year, it raised $100 million in a funding round that valued it at $18 billion. That raises a question of how Perplexity plans to fund its offer to buy Chrome.
Many large investment companies have agreed to fully finance the deal, according to Dmitry Shevelenko, Chief Business Officer of Perplexity. Perplexity chose not to disclose the names of the companies.
An analyst at Robert W. Baird & Co., Colin Sebastian, suggested that Perplexity’s offer significantly undervalues the asset, who estimated its value closer to $100 billion. He also views a forced spinoff as unlikely due to the potential harmful effects on users stemming from low-quality and less reliable products, as well as the challenges in unloading these products from the Google ecosystem when alternative solutions could easily satisfy judicial requirements.
This is not the first time Perplexity has made a proposal for a significant online asset in anticipation of a proposed transition. Earlier this year, the company also made a bid to TikTok parent ByteDance Ltd. to merge its US operations and form a new entity, as it faces a potential ban in the United States without a deal in place.
The market for web browsers has received a lot of attention from AI companies, as they aim to build agents that can automate online shopping and other tasks for users. The AI startup has announced plans to launch a browser called Comet, which features an AI agent.
The company added that it would refrain from making any covert changes to Chrome. This is part of their commitment to ensure that users get the stability that Google gave, and for its advertisers, the spokesperson added.
If the deal is accepted, the AI startup would invest over $3 billion in Chrome and Chromium over the next two years, creating jobs for many Chrome employees.
