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Let's consider what's at stake if Alphabet decided to break apart
In the chopping block: Alphabet, home to some of the internet's most essential services, could be divvied up, and these are the prime pieces up for grabs.
Our Take (Alain McKenna, our site)
Shining Stars
- Chrome browser: The undisputed heavyweight of the Alphabet puzzle, and the crown jewel for potential buyers. OpenAI has indicated interest, partnering with Microsoft (Edge) which trails Chrome with a modest 5% market share (behind Safari). Valued at $50 billion[3], Chrome outsizes Edge by a landslide, making it an appealing acquisition for the Microsoft-OpenAI alliance or other private equity firms.
- Android OS: Despite being an open-source platform, the value lies when Google tosses in its additional services—Play Store, for instance. If severed, Android could become an independent entity, though Samsung may shy away from buying, given its existing ties, while Microsoft learned the hard way with its Nokia acquisition. Still, a consortium led by Chinese device manufacturers Xiaomi, Oppo, and Vivo, could make a play for it.
Following Close Behind
- Google Ads: Accounting for more than a third of the entire advertising market, Google Ads (formerly AdWords) stands as the backbone of Alphabet's revenues. The platform rules the pay-per-click advertising segment, capturing 90% of online search advertising, the most powerful and targeted form of advertising. The advert-focused tech firm valuation would likely hover around $800B-$1T+ using conservative 4-5x revenue multiples[2]. But, due to its interwoven nature with Search, the prospect of a standalone acquisition seems slim, with a forced spin-off into a separate public company appearing more feasible.
Giant Leap: YouTubeCelebrating its 20th anniversary, YouTube started modestly but developed into a digital behemoth in terms of commercial, cultural, and political clout. Experts at MoffettNathanson estimate its value could reach $475-$550 billion (CAD), which suggests no single entity could likely swing such a deal due to the astronomical price tag and the power it carries.
The Big Picture
Divesting Alphabet might appear to decimate the California giant, but any arising digital giants simply reaffirm its impact on the digital landscape. In other words, Alphabet's dismantling would merely lead to a power shift among its divisions.
- The value of Chrome browser, as the undisputed heavyweight in Alphabet's services, is estimated at $50 billion, making it an attractive acquisition target for OpenAI, Microsoft, or private equity firms.
- Android OS, though an open-source platform, may attract a consortium led by Chinese device manufacturers like Xiaomi, Oppo, and Vivo, given its value when coupled with Google's additional services.
- Google Ads, responsible for over a third of the entire advertising market, has a potential valuation of $800B-$1T+, but its interwoven nature with Search suggests a more feasible spin-off into a separate public company.
- YouTube, currently estimated to be worth between $475-$550 billion (CAD), is likely too expensive for a single entity to acquire, and its influence in commercial, cultural, and political arenas suggests it could become a significant digital player in its own right.
