Perplexity’s $34 Billion Chrome Bid: Ambition, Antitrust, or Marketing?

This week, the tech world lit up with one of the most surprising headlines in recent memory: Perplexity, the AI-powered search engine valued at $18 billion, made an unsolicited $34 billion, all-cash bid for Alphabet’s Google Chrome.

Naturally, this raises a few questions:

1. How can Perplexity buy something worth twice its own valuation when they don’t have the cash?

2. Where is that kind of money coming from?

3. Is Chrome even on the market in the first place?

Let’s unpack them.

1. Why this isn’t your typical M&A deal

In most mergers and acquisitions, a larger, more established company buys a smaller one. Payment can be in cash, stock, or a mix of the two. When it’s cash, the buyer either uses what’s already on their balance sheet or raises debt, which lenders will only provide if the pro forma business (meaning, the company after the deal closes) has reliable, stable cash flows. If it’s stock, the seller receives equity in the buyer.

This deal? The opposite. Here we have a smaller, younger company attempting an all-cash purchase of a far larger, more deeply established one. Perplexity’s $18bn valuation as of its latest financing round and big-name VC backing from Nvidia, SoftBank, and Jeff Bezos is lofty for its size. With revenue estimates between $50-150mm over the last year, its price-to-sales multiple could be anywhere from 120x to 360x. Growth is rapid, but there is still a giant question mark about how AI companies will justify these rich valuations. For context: Alphabet's revenue multiple is 6x and NVDIA’s is 30x.

Is there precedent for this? Not really. Deals where a much smaller player buys a far larger asset are rare. One that comes to mind is AOL’s bubble-era, stock-fueled takeover of Time Warner in 2000. At the time, AOL and Time Warner had similar market caps, but AOL (the buyer) generated only about half the earnings of Time Warner. Its stock was so inflated during the dot-com bubble that it was essentially playing with monopoly money, using overvalued equity to fund the deal. When reality set in, AOL’s valuation collapsed, leading to a staggering $100bn goodwill write-down. That deal is still considered one of the most disastrous mergers in history.

Occasionally, you do see smaller companies appear as the buyer “on paper” in what’s called a reverse takeover or merger of equals, where the smaller entity becomes the legal acquirer for structural or listing reasons, but the larger company’s management or shareholders effectively take control. That’s a far cry from Perplexity’s situation, which would require genuine financing to buy Chrome outright.

2. Where could the cash come from?

Perplexity’s offer letter mentions unnamed VC backers. In practice, how this would work is not clear. Would these investors be investing in a special vehicle that is just for Chrome? Without Chrome producing direct cash flows (its value is instead in distribution and search defaults), raising debt against it would be tricky. Would they be investing equity in some combined entity? There are a lot of reasons why this bid is so unusual.

3. Is Chrome even for sale?

The short answer is no. However, this all ties back to the U.S. Justice Department’s antitrust case against Google’s search business. In August 2024, Judge Amit Mehta ruled that Google illegally maintained a monopoly by locking up default-search agreements (like paying Apple billions to be Safari’s default). The case is now in its remedies phase, where the court decides what changes Google must make.

Most legal analysts expect “conduct remedies”, which could include limits on exclusivity deals or potential data-sharing requirements, rather than a sale or public markets separation technique (like a spin off or split off).

By dropping a fully formed offer on the judge’s desk, Perplexity is essentially saying: “If you decide Chrome should be sold, we’re ready to buy and keep it running”. It’s a strategic PR move, but whether it’s an actual real bid remains to be seen.