AI: 'AI Browsers' in the Enterprise. RTZ #835

Enterprise workflow company Atlassian ($TEAM) buying the Browser Company for $610 million in cash is a notable transaction in the evolving field of ‘AI Browsers’. As I’ve discussed for a while in these pages.

The Browser company has its Arc browser and Dia AI browser, that goes up against Perplexity’s Comet AI Browser. With more to come in this category from larger companies. Especially as we move towards an ‘AI powered Internet’.

It’s a topic I’ve discussed at length here at RTZ, with the bigger battles between Google Chrome and Apple Safari with the leading global traditional browser market shares.

And of course Microsoft with its Edge browser, and a host of smaller companies bringing up the rear. Additionally, have long discussed OpenAI’s aspirations in ‘AI Browsers’ right after ‘AI Search’, with an imminent launch likely in its upcoming pipeline of AI Applications. And Anthropic just announced its moves in the area.

So the specifics of this transaction matter in these early days of this AI Tech Wave. And lead to interesting consideration of upcoming chess moves by other players on this game in play.

CNBC summarizes the specifics well in “Atlassian agrees to acquire The Browser Co. for $610 million”:

• “Atlassian has agreed to buy The Browser Co., which is behind the Arc and Dia web browsers.”

• “OpenAI and Perplexity both reportedly looked at acquiring the startup.”

• “Atlassian, whose Jira project management software depends on browsers, wants to enhance the startup’s technology, drawing on its experience selling to big companies.”

“Atlassian said it has agreed to acquire The Browser Co., a startup that offers a web browser with artificial intelligence features, for $610 million in cash.”

“Established in 2019, The Browser Co. has gone up against some of the world’s largest companies, including Google, with Chrome, and Apple, which includes Safari on its computers running MacOS.”

The company had been transitioning from its Arc to the Dia AI browser.

“The startup debuted Arc, a customizable browser with a built-in whiteboard and the ability to share groups of tabs, in 2022. The Dia browser, a simpler option that allows people to chat with an AI assistant about multiple browser tabs at once, became available in beta in June.”

Their products on paper have a good fit with Atlassian, a $43 billlion market cap enterprise software comnpany, with over $55 billion in annual revenues, and over $1.5 billion in free cash flow. And a company that is a mainstay of enterprise software tools and applications for millions of developers worldwide, with intricate product workflows across teams globally.

“Atlassian co-founder and CEO Mike Cannon-Brookes said he sees shortcomings in the most popular browsers for those who do much of their work on computers.”

“Whatever it is that you’re actually doing in your browser is not particularly well served by a browser that was built in the name to browse,” he said in an interview. “It’s not built to work, it’s not built to act, it’s not built to do.”

Atlassian founder/CEO is actively thinking about how AI Browsers can play a role in the enterprise side of the market, in workflows across teams:

“Cannon-Brookes said Arc has helped him feel like he can manage his work, with its ability to organize tabs and automatically archive old ones.”

For its part, the Browser Company has been deeply thinking about AI browsers vs regular browsers for a while now, led by its founder CEO Josh Miller (left below):

“Our metrics were more like a highly specialized professional tool (like a video editor) than a mass-market consumer product, which we aspired to be closer to,” Josh Miller, The Browser Co.’s co-founder and CEO, said in a newsletter update. The startup stopped building new features for Arc, leading to questions of whether it would release the browser under an open-source license.”

And it’s an active area of innovation and development, by tech companies large and small:

“AI search startup Perplexity, which offered Google $34.5 billion for Chrome, talked with The Browser Co. about a possible acquisition in December, The Information reported. OpenAI also held deal talks with The Browser Co., according to the report.”

“Perplexity has been providing early access to its own AI browser, which is named Comet.”

For existing investors, the cash bid is a modest step up from the previous valuation:

“The Browser Co. was valued at $550 million last year. Investors include Atlassian Ventures, Salesforce Ventures, Figma co-founder Dylan Field and LinkedIn co-founder Reid Hoffman.”

And since Atlassian was already an investor, it’s obvious they were thinking about possible enterprise AI applications of the evolving technology:

“The browser is central for those using Atlassian products, such as the Jira project management software, which shows existing support requests on the web. But the plan isn’t simply to make it nicer to work with Atlassian products online.”

“It’s really about taking Arc’s SaaS application experience and power user features, and Dia’s AI and elegance and speed and sort of svelte nature, and Atlassian’s enterprise know-how, and working out how to put all that together into Dia, or into the AI part of the browser,” Cannon-Brookes said.”

In many ways, the transaction shows how there are both enterprise and consumer applications of the same underlying technologies in every tech wave. In a previous post, I’d discussed how AI Search was evolvig with AI native companies like Perplexity on the consumer side, and Glean on the enterprise side.

This acquisition shows the same dynamic developing for Dia-like ‘AI Browsers’ as they’re just emerging.

If anything, this transaction makes Perplexity with its Comet AI Browser, potentially interesting for Microsoft to integrate with its Edge browser technology for its global enterprise customers.

So ironically Perplexity could be potentially interesting for an acquirer or partner like Microsoft on the enterprise as well as the consumer side. Especially given Microsoft’s evolving relationship with OpenAI, and its growing support for multiple LLM AI models for its enterprise offerings. An interesting offset given recent speculation of a possible acquisition by Apple in that context.

Overall, this transaction again underlines the nascent stage of this new AI segment in this AI Tech Wave. And the Fall season for AI tech has just begun. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)