Alphabet: A brain without a body

There is a popular narrative about Google’s parent company Alphabet that its breakup value exceeds its value as a whole. With regulatory pressure mounting and AI threats emerging, investors are dissecting Alphabet’s empire into standalone components, valuing YouTube, Search, Chrome and the advertising stack independently. Some analysts have suggested a sum of the parts windfall means the financial risk for investors is minimal. I don’t.

Alphabet’s strength has always been in its deep integration. Like a human body, its most valuable asset (Search) is the brain, but it does not operate in isolation. It depends on a complex system of inputs and circulatory signals from Gmail, Chrome, Android, Google Maps, YouTube and more. These platforms do not merely coexist they form an interconnected feedback loop of user data and intent signals that drive the most profitable digital advertising engine in the world.

Separate those signals and Alphabet risks losing the very network effects and data symbiosis that are the foundation of its economic moat.

Search Is No Longer Untouchable

AI has certainly shaken the foundations of traditional search. OpenAI, Microsoft, Perplexity and others are offering new search experiences with answer engines that bypass the familiar links model. Google Search obviously still has scale and brand, but for the first time in two decades, it has credible challengers which could prove to be an existential threat. The threat is particularly acute because Search monetisation relies on real estate and AI’s summarised answers offer fewer ad slots and less user click-through.

This doesn’t mean Search is going away. But its dominance may be peaking, and that has serious implications for Alphabet’s cash cow. It also has implications for Meta, as Meta becomes the pre-eminent destination for advertisers seeking precise targeting.

The Antitrust Clock Is Ticking

Meanwhile, two antitrust cases being run by the US Department of Justice could force Alphabet to divest key components of its ad tech stack. One has suggested Google Ad Manager (formerly DoubleClick), its ad exchange and demand side platform, could be separated. While less critical than Search, the ad stack is still a key component of Google’s monetisation machine, and any enforced divestiture would signal that regulators are serious about dismantling the company’s vertical integration. Certainly Google Ad Manager has value as a standalone product.

However, another remedy the Department of Justice has contemplated is forcing divestment of the Chrome browser, and it is concerning that analyst valuation models are assigning standalone values to Chrome, as if it is a discrete profit centre.

Chrome Is the Circulatory System

Chrome’s primary value is not in direct monetisation. It is a vessel for capturing behavioural data including user intent, browsing history, and cross-site activity which fuel the targeting capabilities of Google Ads. The same applies to Android, Gmail and Google Maps. These platforms are telemetry systems, take them away and the ad engine loses signal. For example, YouTube may no longer know your website browsing history, impressions and clicks and this reduces ad targeting.

This is why the sum-of-the-parts thesis is flawed. It is like saying the brain is worth more separated from the nervous system. That might sound plausible in a spreadsheet, but in biological or business systems it doesn’t hold.

A New Threat: OpenAI’s Browser

This vulnerability is being tested in real time. Reuters recently reported that OpenAI, backed by Microsoft, is preparing to launch an AI-powered browser. Unlike Chrome, which passively observes browsing behaviour, OpenAI’s interface will be native to a conversational model like ChatGPT. Users will ask questions, complete tasks, and conduct research directly within the interface, bypassing traditional navigation entirely.

With 400 to 500 million weekly active users, ChatGPT already commands massive attention. If even a fraction adopt OpenAI’s browser, it could seriously erode Chrome’s dominance and by extension, Google's ability to gather the user intent data that underpins its advertising moat.

Chrome isn’t just a browser. It’s one of Google’s most powerful telemetry engines. If OpenAI succeeds in keeping user interactions inside its own walled garden, Google loses visibility and advertisers lose precision. In a world where signal is everything, that is not a trivial threat.

This also solves a major problem for OpenAI: monetisation. Thus far, ChatGPT has been popular but hard to monetise. A browser lets OpenAI move beyond subscriptions and tap directly into high-intent user queries, the very moments that made Google rich. Whether through sponsored responses, API monetisation, or native commerce, OpenAI may have found its first true business model and it comes directly at Google’s expense.

Final Thoughts

Could Alphabet be worth more broken up? Possibly, on paper. But practically a fragmented Alphabet would be less defensible, less profitable and less differentiated.

Investors should be wary of the breakup value thesis. The value of Alphabet is not in its individual instruments; it is in the strength and talent of the full orchestra playing as one.