Google Chrome in the Crosshairs: 64% Oppose Alphabet Split, YouTube Emerges as Crown Jewel

The Department of Justice (DOJ) has turned its antitrust spotlight on Google Chrome, proposing the browser's divestment to curb Google's search engine monopoly. A recent poll, however, suggests that many investors are not on board with a full-blown breakup of Alphabet, with 64% opposing the idea. In this scenario, YouTube stands out as the most coveted unit, should Alphabet decide to split.

The DOJ's latest filing, submitted on Wednesday, outlined a range of remedies to address Google's antitrust violations, with the most drastic being the forced sale of Chrome. The government argues that this move would open the search market to more competition, benefiting consumers and rivals alike. However, the proposal has been met with strong opposition from Google, which claims that the remedies go "wildly overboard" and would "harm Americans and America’s global technology leadership."

A poll conducted by Benzinga revealed that a majority of readers (64%) do not support the breakup of Alphabet, suggesting that investors may be more inclined to maintain the status quo. In a hypothetical scenario where Alphabet were to split, YouTube emerged as the top choice for investors, with 43% indicating that they would most want to invest in the video-sharing platform.



YouTube's appeal lies in its extensive user base and content library, which differentiates it from other Alphabet units. With over 2 billion users and an extensive library of user-generated videos, original programming, and exclusive content deals, YouTube has proven to be a cash cow for Alphabet. Its ad-supported business model, supplemented by a premium subscription tier, has been a successful revenue generator.

Operating independently, YouTube could explore new business models, such as subscription content and in-app purchases, without Google's influence. This could lead to increased revenue and market share, as seen with Netflix and Spotify. However, independence might also expose YouTube to increased competition, as other platforms could leverage their own unique offerings to attract users. Additionally, YouTube's independence could strain relationships with Google, potentially impacting shared resources and user bases.



Despite these challenges, YouTube's vast user base and content ecosystem give it a strong competitive advantage, making it a promising standalone entity. Investors should consider allocating capital to YouTube if Alphabet were to break up, given its robust ad revenue growth and dominant market position. In April 2024, YouTube generated $8 billion in quarterly ad revenue, up 21% year-over-year, and Nielsen data shows it's the most-watched streaming service in the U.S. for over a year.

In conclusion, while the DOJ's proposal to break up Alphabet may face public opposition, it is essential to consider alternative restructuring strategies that could address antitrust concerns without fully separating YouTube. Google could spin off Chrome or Android, agree to share more data with competitors, or divest its advertising technology business. These alternatives would allow Alphabet to maintain control of YouTube, while still addressing the DOJ's antitrust concerns. Ultimately, investors should remain focused on the enduring business models and market dynamics of each Alphabet unit, making informed decisions about capital allocation in a post-breakup scenario.