TL;DR: AI startup Perplexity has made a $34.5 billion bid to acquire Chrome, despite previously opposing its divestiture from Google and arguing no other company could run it effectively. We are concerned that this sale could lead to a 70% plunge in web platform investment and that Perplexity has neither the means nor incentive to fund the web platform to the same level as Google. This outcome would further strengthen the anti-competitive grip of Apple and Google’s native platforms at the expense of the open web.

Perplexity's U-Turn

This offer comes as Judge Mehta is considering forcing Google to sell the browser. Perplexity claims “multiple large [venture capital] funds have agreed to finance the [all-cash] transaction in full”, but refused to name them.

This is also at odds with statements made by Perplexity earlier this year where they essentially said the opposite, stating that Chrome should not be sold as no other party would be able to run the browser at that scale without a hit on quality, nor would they have the business model:

Google should not be broken up. Chrome should remain within and continue to be run by Google. Google deserves a lot of credit for open-sourcing Chromium, which powers Microsoft's Edge and will also power Perplexity's Comet. Chrome has become the dominant browser due to incredible execution quality at the scale of billions of users.

The DOJ is pushing for Chrome to be divested from Google. We don't believe anyone else can run a browser at that scale without a hit on quality, nor the business model to be able to serve that many users profitably by keeping the browser free. Chromium is open source, and others can build using that. Evidence: Microsoft Edge and Perplexity's upcoming Comet browser. [...]

The remedy that is right in our opinion is not a breakup of Google; but rather offering consumers the choice to pick their defaults on Android without feeling the risk of a loss in revenue. That's what we will be proposing.

Aravind Srinivas - Cofounder & CEO of Perplexity
(emphasis added)

So why has Perplexity changed their mind and why do they want to buy Chrome and Chromium now?

Why does Perplexity want to buy Chrome and Chromium?

The most obvious motivation is user acquisition. Chrome has over a 1000x the user base of Perplexity. Perplexity reportedly has fewer than 3 million daily users, compared to Chrome’s 3.45 billion. Even capturing a small percentage of that user base through this acquisition would represent a massive boost, something they could show to investors.

While Perplexity has a steadily growing userbase, this acquisition would catapult them to be the largest AI company by active users on the planet.

Will Perplexity continue to fund Chromium?

We, along with many others in the industry, are deeply concerned this sale will lead to a plunge in web platform investment, harming every consumer and business that relies on the web. Our baseline scenario estimates this sale would result in approximately a 70% decline in overall web platform investment.

Even Perplexity’s earlier statement shows that they shared our concern.

Our primary concern is whether Perplexity would have both the means and the incentive to continue funding Chromium, the browser engine that powers Chrome, Edge, Opera, Vivaldi, Brave, and numerous smaller browsers. Beyond browsers, Chromium and its underlying technologies power a wide range of native apps and are critical to the server-side infrastructure of many of the world’s highest-traffic applications.

Given that Perplexity would need to borrow heavily to finance such an acquisition, and given they would gain access to Chrome’s user base regardless of their level of web platform investment, it’s unclear whether they would be willing or able to sustain the current ~$1 billion USD annual investment in web platform development that Google is doing.

What should the DOJ and Judge Mehta do?

The core problem for the DOJ and Judge Mehta is how to dismantle Google’s monopoly without harming adjacent markets such as the entire web platform. We believe that we have a strong case that this sale will lead to a plummet in web platform investment, harming every US consumer and company that relies on the web.

We have proposed the following alternatives:

• Cap Google’s default search deals to 50% per browser, excluding Apple, whose contract should be canceled entirely.

• Introduce a carve-out for smaller browsers.

• Mandate 90% reinvestment of Google search revenues into web platform and browser development.

• Restructure Chrome as an independent subsidiary within Alphabet.

• Limit Chrome’s default search deal with Google to 50% of users and auction the remaining defaults to rival search engines.

• Enforce transparency and fair revenue share terms across all search deals.

Conservatively, we estimate these adjusted remedies would reduce Google’s U.S. search market share to below 50%, the threshold for presumed monopoly power. Critically, though, rather than collapsing platform funding, these adjusted remedies would likely increase web platform investment by 150%, creating a healthier, more competitive, and more innovative internet ecosystem.

Since the primary justification for these remedies is to prevent actions that would inadvertently dismantle the funding that sustains the web platform, it is both logical and essential that they include concrete safeguards to ensure that goal is actually met. For this reason, we have proposed measures such as minimum reinvestment requirements for any revenue derived from Google search deals, so that these remedies not only avoid harm, but actively support the long-term health of the web platform.

Our goal is not to weaken the DOJ’s case or shield Google. The anticompetitive behavior must be addressed, but the remedies must not destroy the very ecosystem that Google itself indexes.

We appreciate that the DOJ have listened to us and other concerned parties, and made this small change in its Revised Final Judgment Proposal , which now requires an evaluation of the buyer’s business and investment plans, including those for the open-source Chromium project:

The evaluation of any potential buyer shall include the potential buyer’s proposed business and investment plans (including those for open-source project Chromium), the United States’ evaluation, at its sole discretion, of any potential risks to national security, the potential buyer’s plans for sharing and protecting user data included in the acquisition, and any other issues a potential buyer may present. Plaintiffs’ Revised Proposed Final Judgment
(emphasis added)

However, while this is a step in the right direction, it still falls short. If the DOJ is serious about ensuring a viable sale, it should require a minimum annual funding commitment of at least 50% of Google's average annual investment in Chromium over the past five years. Anything less would tacitly admit that a significant drop in web platform funding is expected and that no viable buyer who will adequately fund the web platform exists.

About Open Web Advocacy

Open Web Advocacy (OWA) is an independent non-profit dedicated to promoting fair competition in both browsers and web apps. We receive no funding from browser vendors, search engine providers, or any companies involved in this case, nor do we advocate on their behalf. Our work is focused entirely on defending the interests of consumers, developers, and the open web.

Our interest in this case is driven by concern over the potential unintended consequences of some of the DOJ’s proposed remedies, and the broader impact these measures could have on the health of the web and the millions of developers and billions of consumers who rely upon it.

Further Reading

For those who want to dive deeper, we’ve published several in-depth pieces examining the potential impact of a Chrome breakup:

• Break Google’s Search Monopoly without Breaking the Web

• Industry Voices Caution Against DOJ’s Plan to Force Sale Of Chrome

• Is It Worth Killing Mozilla to Shave Off Less Than 1% From Google’s Market Share?