Could Google’s Chrome Browser Be Its Downfall? Barclays Issues Stark Warning
Alphabet Inc. (NASDAQ:GOOG) is at a pivotal crossroads, with much at stake. **According to Barclays**, the tech giant could experience a shocking **25% drop in its stock value** if the courts mandate the divestiture of its widely-used Chrome browser. This news has sent ripples through the financial community, posing serious questions about Google’s future.
The Antitrust Case Heatens
The stakes couldn’t be higher as the **Department of Justice (DOJ)** presses for significant changes in Google’s operations. During the closing arguments of an ongoing antitrust trial, the DOJ suggested that Google **spin off Chrome** and provide competitors with equal access to its valuable search data. This move aims to dismantle Google’s nearly **unassailable dominance in the search market**. As we await Judge Amit Mehta’s remedy ruling, anticipated in August, the repercussions could be monumental.
Financial Forecasts Under Fire
Barclays analyst Ross Sandler warns that the divestiture of Chrome—used by **over 4 billion people worldwide**—could lead to a staggering **30% reduction in EPS**. This is particularly alarming given that the browser contributes approximately **35% to Google’s search revenue**. As analysts voice their concerns, the pressure mounts on Google to navigate these troubled waters.
The Bullish Stance: Is It Justified?
Despite the looming threats, Sandler remains cautiously optimistic, maintaining a **Buy rating on GOOGL**. He forecasts a **30% upside** from current stock levels, asserting that a forced sale of Chrome is unlikely. Should the worst-case scenario unfold, potential buyers could include **wealthy AI contenders like OpenAI, Anthropic, or Perplexity**—a testament to the value of the Chrome ecosystem.
The Broader Implications for Investors
For investors, the implications of losing Chrome extend beyond mere numbers. **Chrome is not just another web browser**; it serves as a crucial gateway to Google’s expansive services, advertisements, and data management. A loss of control over this platform would disrupt Google’s ecosystem and challenge its ad monetization strategies, ultimately compelling the tech behemoth to reevaluate its entire business model.
As we watch this gripping scenario unfold, stakeholders would do well to keep a keen eye on developments. With so much riding on a court’s decision, Google may be facing its biggest test yet.
This article first appeared on GuruFocus.
