The U.S. government is considering forcing Google to divest its Chrome browser to address anti-competitive concerns. Analysts suggest such a sale could significantly impact Google’s business, as Chrome is a key data source. While the browser could be valued at over $15 billion, finding a buyer may be challenging due to regulatory scrutiny. Future court rulings and political dynamics, including Donald Trump’s skepticism about breaking up Google, add uncertainty to the situation.
The U.S. government is taking significant steps towards potentially forcing Google to sell its Chrome web browser in an effort to curb its competitive edge. This move could fundamentally alter the landscape for the tech giant, depending on whether any buyers emerge. On Wednesday, the U.S. Department of Justice proposed this action to a federal judge in Washington, who is expected to deliver a ruling next year on the penalties for Google, which has been found guilty of engaging in anti-competitive practices within the online search realm.
Impact on Google’s Business Model
According to Dan Ives, an analyst from Wedbush Securities, such a sale would deal a significant blow to Google, fundamentally changing its business dynamics. Beth Egan, a professor of advertising at Syracuse University, elaborates that losing Chrome would strip Google of a crucial internet gateway, from which it collects valuable data to enhance its algorithms and strengthen its search capabilities. Since its launch in 2008, Chrome has grown to dominate the browser market, capturing nearly 70% and causing a steep decline in the usage of Microsoft’s Internet Explorer and Edge, which now hold less than 5% combined.
Despite the potential upheaval, experts do not foresee this sale leading to an existential threat for Google. Egan draws a comparison to Apple’s significant restrictions on “cookies” in its Safari browser, which allow advertisers to track user behavior online. “Advertisers initially expressed concerns, but adapted over time,” she notes, suggesting that Google would likely do the same if faced with this challenge.
Valuation and Buyer Landscape
A Bloomberg analyst estimates that Chrome, with over three billion users, could be valued at a minimum of $15 billion. However, establishing a clear market value is complicated due to the lack of comparable sales. For instance, in 2016, Opera Software ASA sold its browser for $600 million when it had only 350 million monthly users.
When it comes to potential buyers, Evelyn Mitchell-Wolf from Emarketer suggests that options are limited. She cautions that any company capable of making such an acquisition is likely already under scrutiny from regulatory bodies. Egan concurs, emphasizing that it would be challenging to find a buyer without triggering further competition issues. However, Mitchell-Wolf speculates that the U.S. government might permit an American company to acquire Chrome to foster innovation in artificial intelligence and bolster the nation’s position in this emerging technology sector.
If Chrome were to be separated from Google and assigned a new default search engine, Mitchell-Wolf predicts that traffic could shift to the new platform, assuming the quality remains high. This scenario could potentially reduce Google’s market share. However, she warns that this outcome hinges on the new owner’s commitment to invest in and innovate Chrome. The Department of Justice holds the belief that users favor Google due to its status as Chrome’s default search engine. If given alternatives, users might choose differently, although she finds that outcome unlikely.
Judicial Perspectives and Future Implications
As the situation unfolds, many anticipate that Judge Amit Mehta may not adhere to the U.S. government’s recommendations concerning Chrome. According to Angelo Zino from CFRA, these proposed measures are extreme and not likely to be mandated by the court. Furthermore, the upcoming Trump administration could play a pivotal role, adding a layer of unpredictability to the proceedings.
In October, Donald Trump expressed skepticism about the breakup of Google, arguing that such a move could harm the United States on the global stage. He stated, “China is afraid of Google,” while also voicing his criticisms of the tech company based in California.