Perplexity's Perplexing and Positively PR Offer to Buy Chrome
Katherine Blunt
I'll give Perplexity one thing: making the offer thirty-four-POINT-five billion dollars is a nice touch. It makes it seem precise. Like a business person put a lot of thought into this transparently silly marketing stunt. A non-serious offer would be, say, $30B. But $34.5B? There's clearly math there, somewhere!
Perplexity on Tuesday offered to purchase Google’s Chrome browser for $34.5 billion as it works to challenge the tech giant’s web-search dominance.
Perplexity’s offer is significantly more than its own valuation, which is estimated at $18 billion. The company told The Wall Street Journal that several investors including large venture-capital funds had agreed to back the transaction in full.
Yeah, I mean if a VC fund were offered the chance to invest in a piece of software with 3.5B active users, they would do it every day of the week. Even if it takes $34.5B? Well, we're narrowing down the funds that could help with such a buyout, but sure, why not? It would have the potential to transform Perplexity from a second-tier AI startup to the first-tier immediately. And that first-tier is currently worth $300B (soon, perhaps to be $500B), (maybe) $200B, and $170B, with OpenAI, xAI, and Anthropic, respectively. Perplexity's current $18B valuation with Chrome added-on would zoom right past $50B.
That sounds good and fine on paper, but how would it actually work? If the VCs are footing the bill for Chrome, presumably they don't then own 100% of it, and instead are giving the money to Perplexity to buy it which would then boost the valuation to something well north of that $50B? Again, given the ceiling with the other top-tier AI startups, there is room to grow here – though all of those other three players actually train frontier models, Perplexity still would not in this scenario. And how certain are we that Perplexity would be able to fully leverage that 3.5B user base? Certainly, there would be some churn – probably a lot when people got a new version of Chrome and were confused/weirded out by all the new Perplexity – a brand almost none of those 3.5B users will know – pimping being done inside.
And that's if the judge lets them move all or even some of that user base over. And if they weren't allowed to do that, what's Chrome worth to Perplexity? The brand certainly has some value, but it's probably closer to $0 than $3.45B!
And wait. I'm taking this all way too seriously now. Again, this is clearly a marketing stunt. As it was the first time Perplexity floated it. And just as it was when they floated buying TikTok too. Perplexity loves this shit. And the press eats it up. And now I'm eating up the leftovers! Because guess what? Google is not selling Chrome! So this is like a strawman at an auction.
Yes, the judge in the antitrust case against Google is set to rule soon on the Chrome remedy, but it still feels unlikely he will make Google do something so drastic with Chrome. Because it just doesn't make a ton of sense (though Google is trying like hell to make it make more sense for the judge by shoving Gemini into Chrome!). Even if anyone could figure out the math, gifting Chrome to one of the AI players would be like the judge anointing a new king in the space – certainly if he let OpenAI buy it! Maybe there's a solution where a non-profit consortium is set up to manage a spun-off Chrome, much as they do with the Chromium layer that underpins Chrome (and many other browsers – including Perplexity's new one). But how well do non-profit consortiums do when it comes to building and maintaining actual products? (Don't say ChatGPT given OpenAI's "non-profit" status here!)
Estimates of Chrome’s enterprise value vary widely but recent ones have ranged from $20 billion to $50 billion.
I actually think Chrome is worth far more than that – to Google. But it's possible that it's also worth far less than that to anyone else. Because a huge part of the value of Chrome to Google is not needing to pay other companies for default placement in their browsers – you know, like the $20B+ a year Google pays to Apple right now, which also may be going away with the antitrust changes. Imagine a world where Chrome doesn't exist, or more to the point, where Google doesn't own Chrome, they're going to be paying tens of billions more to others. Maybe even to Perplexity in this scenario! How much is not paying those fees worth to Google? A lot. Certainly far more than even $34.5B.
That said, the value to others is likely in that massive user base. And again, if you remove Google from Chrome, it's hard to know where those users go. Do they stay? A lot of them surely would if Chrome owned by someone else was allowed to simply update the browsers already installed billions of times around the world. But if they had to re-download this newfangled Chrome, the situation gets more complicated, fast.
Again, I'm taking this way too seriously! It's not happening. Just like OpenAI isn't buying Chrome. Still, it's a somewhat savvy, if farcical, move on Perplexity's part:
The Perplexity offer could be an attempt to signal to the judge that there is an interested buyer, should he force a sale. In a letter to Sundar Pichai, chief executive of Google parent Alphabet. Perplexity said its offer to buy Chrome is “designed to satisfy an antitrust remedy in highest public interest by placing Chrome with a capable, independent operator.”
They know that the judge has been trying to figure out if a spin-off, sell-off deal was even feasible, and that's why you had all the players coming out of the woodwork to say that they'd be happy to buy Chrome. Of course they would! A weakened Google, even if Perplexity or anyone else can't buy Chrome, is good for Perplexity and all of the other players here – certainly when you consider what a formidable rival that Google is in AI.
Perplexity told Pichai that, as part of the proposed acquisition, it would maintain and support Chromium, the open-source project that supports Chrome and other browsers. It also said that it would continue placing Google as the default search engine within Chrome, though users could change settings.
That's another savvy move as it directly answers a key question I had about all of this selling-off Chrome stuff. Perplexity says it would continue to maintain Chromium – which again, Perplexity itself and many other browsers now use. So that's a good/important thing to signal. For a deal that will never happen.
Look, I'm trying to be reasonable here. Perplexity's move is clearly a publicity stunt (which they'd never admit, obviously), and I respect the hustle to continually get outlets like The Wall Street Journal, The New York Times, and Bloomberg to write about your company. And it has the added benefit of adding pressure to the antitrust case, trying to showcase to the judge that others would be willing to buy Chrome from Google.
All that said, Perplexity does this type of stuff a lot. Too much, in my opinion. They should focus on building great products and a great, sustainable business. The first product was good. I'm less sold on the other attempts – including, by the way, their first take on a web browser in Comet, which I got access to last week and am generally underwhelmed by – certainly versus what another AI-first browser, Dia, is doing. Though I will say, Comet is a lot like Chrome! A sort of uglier Chrome.
I've long thought it made some sense for Apple to buy Perplexity given not just the AI chops, but the Search element as well. But I've always been hesitant about the cultural fit. And this kind of stuff just adds to that problem. Apple would have to be pretty desperate to buy up a team that constantly pulls such shenanigans.
Then again, Apple is pretty desperate...
Update: As Drew Breunig points out on Xitter, if you ask Perplexity how many users Chrome has, it cites 3.45B (rather than the 3.5B cited in the WSJ report). This certainly seems like the way they came to the $34.5B number – they're paying $10 per user – which is arguably more ridiculous than pulling a number out of thin air. Per below, the user number is a rough estimate that is undoubtedly off by some amount. But even that aside, paying $10/user is far below what many – certainly Google! – estimate such a user to be worth. And again, all of that math assumes that Perplexity would get to move over all of those 3.45B guesstimated users – and if they could, that they could get them all to stick around...
M.G. Siegler
M.G. Siegler
M.G. Siegler