Why Alphabet Stock Cranked Higher Today
Alphabet's stock rose nearly 3% amid ongoing antitrust proceedings, fueled by speculation that OpenAI might acquire its Chrome browser. OpenAI's product head suggested this during the trial, which could help Alphabet navigate its legal challenges. The Department of Justice is concerned about Alphabet's search monopoly impacting the AI race. While Alphabet hasn't confirmed any sale plans, the potential sale of Chrome could address antitrust issues and alter the competitive landscape, especially with Microsoft's interest in OpenAI.
Although Alphabet (GOOG 2.81%) (GOOGL 2.74%) is currently undergoing a tough antitrust case, investors pushed the prices of its two share classes higher on the second trading day of the week. Many were cheered by the prospect of a top name in artificial intelligence (AI) potentially buying one of the company's more high-profile assets. This could be a neat way out of its current legal bind. On the day, Alphabet's stock price rose by almost 3%.
A promising offer?
During Tuesday's session of the antitrust court case, a key executive at that AI business, leading developer OpenAI, stated that his company could buy the Chrome browser. Chrome is a popular free product developed by Alphabet's core Google unit.
Nick Turley, the head of product of OpenAI's high-profile ChatGPT service, made the remarks while testifying at the Alphabet trial. The Department of Justice (DoJ) brought the suit, accusing the tech industry titan of engaging in anti-competitive practices with its foundational search business.
Federal prosecutors are particularly concerned with the future of AI. They stated in their opening statements during the trial that Alphabet's alleged monopoly in search could give it an unfair advantage in the current, very high-stakes AI race.
Alphabet has not publicly stated, at least to date, that it is considering a sale of Chrome.
A potentially valuable chip to play
Nevertheless, Turley's pronouncements are meaningful.
Chrome is, by its nature, a big platform for Alphabet, not least because it's the default search engine packed into the software (many users might not even be aware that they can change this to a rival site). The government might consider a sale sufficient to allay its antitrust concerns, or at least part of a settlement.
While OpenAI is an independently owned and operated company, it has benefited from sizable investments from Alphabet's longtime peer and sometime rival, Microsoft. Microsoft has its own search engine, Bing, which could very well become Chrome's default if OpenAI becomes the browser's new owner.