By Anirban Sen and Milana Vinn

(Reuters) -Google parent Alphabet has been talking to its advisers about the possibility of making an offer for HubSpot, an online marketing software company with a market value of $35 billion, people familiar with the matter said.

If Alphabet moves ahead with a bid, it would be a rare example of a major technology company attempting a mega deal amid heightened regulatory scrutiny of the sector under U.S. President Joe Biden's administration.

The potential acquisition would be Alphabet's largest ever and allow it to put some of its cash pile, which reached $110.9 billion at the end of December, to work.

Alphabet has met with Morgan Stanley investment bankers in recent days about a potential offer for HubSpot, the sources said. It has been discussing how much it should offer and whether antitrust regulators would clear such a tie-up, the sources added.

Alphabet has not yet submitted an offer to HubSpot and there is no certainty it will do so, the sources said, requesting anonymity to discuss confidential deliberations.

"As standard practice, HubSpot does not comment on rumors or speculation. We continue to focus on building a great business and serving our customers," a HubSpot spokesperson said.

Alphabet and Morgan Stanley did not immediately respond to requests for comment.

HubSpot's shares rose 11% to $693 on the news on Thursday. Alphabet shares were down 1% at $153.34.

HubSpot, which listed in the stock market in 2014, provides marketing software to companies that typically have up to 2,000 employees.

It generated $2.2 billion of revenue in 2023 and posted a net loss of $176.3 million. Despite this loss, investors are excited about the Cambridge, Massachusetts-based company's growth prospects, driving up its shares 50% in the 12 months.

A deal for HubSpot would expand Google's offerings in the booming market for customer relationship management (CRM) software, enabling it to tap a wider base of enterprise customers who spend on marketing and advertising.

It would also be a boon for Google's cloud computing business, which is seeking to narrow its competitive gap with rivals Microsoft and Amazon.com.

Google may also be able to argue to antitrust regulators that the acquisition would bolster competition in the marketing and sales software sector, challenging the dominance of players such as Salesforce and Microsoft. Many of these companies are enhancing their offerings with artificial intelligence, a technology in which Google is also investing to get an edge.

Google is facing several antitrust challenges, including a landmark lawsuit accusing it of abusing its position as online search leader.

Alphabet CEO Sundar Pichai is looking for avenues to boost growth after the company disclosed in January that fourth-quarter advertising sales came in below expectations. Its Google search engine and YouTube video streaming service face increased competition for advertising budgets from other online platforms, including Facebook, Instagram, TikTok and Amazon.com.

Dealmaking in the broader technology sector is picking up. In January, design software company Synopsys agreed to buy smaller rival Ansys for about $35 billion. Hewlett Packard Enterprise struck a deal in January to buy networking gear maker Juniper Networks for $14 billion.

Technology accounted for the largest share of merger and acquisitions during the first quarter, jumping more than 42% year-on-year to about $154 billion, according to Dealogic.

(Reporting by Anirban Sen and Milana Vinn in New York; Additional reporting by Jeffrey Dastin in San Francisco; Editing by Chizu Nomiyama, Nick Zieminski and Richard Chang)