Thanks to my colleague Mike Boland for pointing out this post on the Search Engine Watch blog (Gary Price), which points to Dirson, about Google possibly buying Oslo-based Opera. (Opera has an approximately 1 percent market share.) There's also lots of discussion in Gary Price's post about the history of the rumored Google Browser.
Here's Om Malik's earlier post on the Google-Opera relationship and deal that made Opera free.
Google's toolbar and desktop search apps (including Sidebar) are moving in on offering browser-like tools and functionality without being a browser per se. If this rumor proves to be true, it would allow Google more control over the "virtual desktop" (since that's what browsers are increasingly becoming) and more access to users/user behavior.
There are both ad revenue and market-share implications if the company actually does this.