Today Google, the company, is smaller while the Google universe seems to be expanding with the announcement by CEO Larry Page of a new umbrella company called Alphabet, which will include a stripped down Google focused on search and Internet products and other companies like Calico operating as subsidiaries of the new company.
The announcement came in a post on the Google company blog by Page that is also cross-posted on the new, otherwise barren Alphabet home page.
"Our company is operating well today, but we think we can make it cleaner and more accountable. So we are creating a new company," writes Page.
In essence, what yesterday was Google today is called Alphabet, but under the umbrella of the new name is a wholly-owned subsidiary that will still be named Google focusing on Internet products. Alongside the new, smaller Google within Alphabet will be a number of other companies working on disparate projects like the aforementioned longevity company, Calico, a life sciences company working on a glucose-sensing contact lens, the lab formerly known as Google X and investment arms Google Ventures and Google Capital, just for starters.
Page will be CEO of Alphabet and Sergey Brin will be President. Sundar Pichai, who has been in charge of products at Google, including Android, Chrome and Maps, will be the new CEO of the new, stripped-down Google. Although Page doesn't say so specifically, it seems that some of the company's biggest properties like Android and YouTube will remain a part of the smaller Google.
Normally news of what is basically a corporate restructuring isn't so interesting except that it involves a company that is, itself, involved in so many interesting and disparate pursuits. While Page is framing the structural change as a way for Google (erm, Alphabet) to stay on its toes and maintain its innovative spirit as it continues as a mega-corporation, we have to wonder if there might be myriad and more esoteric legal and financial benefits to this move that aren't immediately apparent to the lay tech enthusiast.
According to one filing, Google and the other new subsidiaries of Alphabet will report separately to investors, which is surely part of the increased accountability that Page is referring to.
For those who follow Google's moves with interest, the creation of Alphabet could hopefully give more of the company's many diverse projects a fighting chance of reaching fruition by having the support and independence required to go the distance. Over the years, Google has created a number of products that are later suddenly shuttered to the dismay of their user base (Google Reader, Glass, Buzz, Notebook, Wave, Health. just for starters), usually in the name of greater corporate focus.
Alphabet and the new structure will be phased in over the next few months, with the new company reporting its results for the first time under the new name and structure beginning with the fourth quarter earnings release in January. Google shareholders will automatically convert to Alphabet shareholders, but the stock will continue to trade under the same GOOG and GOOGL ticker symbols.
Sources: Google
