Yahoo would make a bid for Chrome if a US federal judge ordered Google to divest the asset, a top executive said today, estimating the browser’s market value to be in the “tens of billions of dollars.”
Yahoo would make a bid for Chrome if a US federal judge ordered Google to divest the asset, a top executive said today, estimating the browser’s market value to be in the “tens of billions of dollars.”Chrome is "arguably the most important strategic player on the web,” Brian Provost, senior vice president and general manager of Yahoo Search, said in his testimony.
The Internet search executive appeared as a government witness in a monopolization trial brought against Google by the US Department of Justice and a multistate coalition led by Colorado.
Google was found liable by a federal court in August for having illegally monopolized the Internet search and search text ads markets. US District Judge Amit Mehta is presiding over a three-week remedy trial to address Google’s monopoly in which the government seeks the forced sale of its Chrome browser, a contingent divestment of the Android operating system and other behavioral remedies to be imposed on Google.
Provost testified that web browsers are valuable distribution paths for search engines because most user queries take place within the browser. “We believe that upwards of 60 percent of queries are done through the web browser.”
Travis Chapman, counsel for the DOJ, quizzed the Yahoo executive on whether the company has considered building a web browser. Provost said Yahoo is “actively, internally” developing a prototype of a browser just to understand what really is involved in the process. The internal team is looking at six to nine months to complete the project, he said.
“It's very much under evaluation. [What] we're kind of learning as we go here is that that's the proper way for us to enter the market,” Provost said. “We looked at M&A partnership as well as for other opportunities for us to enter the browser market.”
“Have you also looked at buying a browser?” Chapman asked. “If the court ordered Google to divest the Chrome browser, would you be interested in acquiring Chrome?” Provost said yes.
And Chrome is also “something we consider, not only just for search, but for its ability to represent, render, and distribute all of Yahoo products,” the executive testified.
Yesterday, executives from Perplexity AI and DuckDuckGo separately testified that they would be interested in buying Chrome if Mehta ordered Google to forcibly sell the browser.
DuckDuckGo CEO Gabriel Wienberg said his back-of-the-envelope calculations show that Chrome’s market value is “upwards of $50 billion.” With an OpenAI executive also having testified earlier this week that the AI giant would be keen on purchasing Chrome, the US Department of Justice now has at least four potential suitors for the Google product (see here and here).
— Chrome’s impact on Yahoo —
The DOJ attorney asked Provost if Yahoo has considered which search engine it would set as the default if it were to acquire Chrome.
“Yes. Yahoo,” Provost said. “It's our product. We're proud of it.”
The acquisition of Chrome would also help the market share that Yahoo Search possesses. “We believe that if we were to acquire Chrome, our market share would go from, say, 3 percent to double digits.” Provost said this would be a significant increase for Yahoo.
Yahoo Search is positioned as number three in the US market, Provost said, citing data by StatCounter. The search engine gets a little under 10 billion queries in a year, he said.
Chapman inquired about efforts Yahoo has made to evaluate the possible purchase of Chrome.
“We don't have an accurate internal view of what the Chrome business looks like. So, we understand it's external numbers, the sizing of market share of Chrome, and people are all familiar with the product, but it's very cursory in that we don't have an understanding in what it's actually like to run that business,” Provost said.
The executive put the potential valuation of Chrome, based on “back of a napkin… given our inability to really dive deeper into the business,” in the “tens of billions of dollars.”
When Chapman asked how Yahoo would be able to pursue a deal in that amount, Provost said, “we would be able to pursue it with a follow-up [offer].”
If acquired, Chrome would also increase the Yahoo market share as well as user query volumes, Provost said.
That query-volume increase would positively impact Yahoo Search quality as the company would have more data that would allow it to make better product decisions, he said.
— Data sharing —
At present, the Yahoo strategy is to reinvigorate the search business, Provost said. The company has upgraded all of its products, but specifically search, in the last year. Yahoo has been relaunching products that the company feels are more competitive in the marketplace today, Provost said.
This includes incorporating artificial intelligence behind the scenes in understanding user query. “We're trying to interpret from past data what the likelihood is of what the user is asking for, what we expect them to be satisfied with. That's constantly evolving as we update models behind the scenes in the AI component of how we train and build those models,” he said.
Data is what makes a search engine attract users. While Yahoo collects location data, data on queries while users make clicks on the search results page, data on time spent on search results, and various other engagement signals around the quality of their session, Google has more of this data, Provost said.
“Google has more access to data than Yahoo does at 90 percent or so market share. They see more data. They see it quicker, and us having access to that data would help us refine the quality of our products,” the executive said.
Chapman asked if that Google data would be useful to Yahoo. One of the several behavioral remedies proposed by the DOJ and states includes making Google share data.
According to the government’s remedy proposal, Google should make its search index available at marginal cost, and on an ongoing basis, to rivals and potential rivals. The proposal also requires Google to provide rivals and potential rivals both user-side and ads data for a period of 10 years, at no cost, on a non-discriminatory basis, and with proper privacy safeguards in place (see here and here).
“How would it help you refine the quality of your product?” Chapman asked.
“One: being able to be quicker,” Provost said. “Some of the fringe things, they just absolutely see interest or topical interests forming before we would. The volume of queries and how they're constructed, and what the users are actually choosing to be successful in their tasks, all those things help us build a better product.”
If the court were to order the data-sharing remedies that the DOJ has recommended, Yahoo would use that data, he said. However, Yahoo isn't looking for anything that's not anonymized. Any incremental data test is going to be helpful for being more successful in building better products for users, he said.
— Cross-examination by Google —
John Schmidtlein, counsel for Google, asked Provost whether one of the reasons Yahoo abandoned other potential acquisitions of browsers is the number of very competitive browsers already in the market.
Provost said that’s not a fair characterization of their internal decisions, saying he believes the browser market to be “very competitive right now.”
“Another reason that you've decided to date not to acquire a browser was a concern that if you set Yahoo as the default search engine in that browser, you wouldn't be able to monetize because people would switch away from Yahoo. Isn't that right?” the Google attorney asked.
The Yahoo executive replied that the company believes it would not be able to monetize at the level at which Google monetizes.
Schmidtlein introduced an exhibit which was part of an e-mail chain. It said: “Yahoo’s past experiences in the browser space have not been positive.”
“Mozilla partnership: In 2014 Yahoo signed a deal with Mozilla to become the default search for its browser. Mozilla exercised its right to terminate this deal in 2017 after Yahoo was acquired by Verizon and switched back to Google after what seemed to be a failed 3-year experiment,” the document said.
Provost said the document does not reflect the thinking of the current Yahoo team which is tasked with understanding the efficacy of the browser market. The undated document does not reflect Provost’s current opinion, he said.
Schmidtlein introduced another exhibit, an excerpt of which said, “Rationale” and “To compete with other search engines, we have to meet or exceed user expectations. We are not meeting expectations today.”
Provost said he didn't create the internal Yahoo document but in response to a question, he testified that he agrees that last October, Yahoo Search wasn't meeting expectations at least in comparison to the competition.
The Yahoo executive also testified that its search infrastructure was antiquated, but that the company has taken steps to try to solve it.
Trial continues tomorrow, with the DOJ calling Parisa Tabriz, Google’s vice president of engineering and general manager for Chrome, as an adverse witness.
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