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Google Restructures As Alphabet Inc.: Will The ABCs Of Technology World Change?

11 August 2015, 9:23 am EDT By Nicole Arce Tech Times
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After undergoing a massive shakeup, Google is now the subsidiary of a new holding company called Alphabet, but most people won’t probably feel the changes at all.   ( Ralph Orlowski | Getty Images )

Google threw the entire technology industry into a frenzy on Monday when it announced the biggest restructuring of its business throughout its mere 19 years of history. However, the changes are not likely going to be felt by the average Internet user.

The Google industry knew on Sunday, the single company that was a hodgepodge of various businesses from Internet search to driverless cars and cancer-detecting pills, is now called Alphabet Inc., a holding company that will be headed by Google co-founder Larry Page as CEO, co-founder Sergey Brin as President, and Google chairman Eric Schmidt as chairman.

Google, meanwhile, will become a subsidiary of Alphabet, with current vice president of products Sundar Pichai as the new CEO of the slightly slimmed down new company. As CEO, Pichai will be overseeing Google's known profitable products, including search, ads, Android, Chrome and YouTube. YouTube chief Susan Wojcicki will be reporting to Pichai as her direct supervisor instead of Page.

This means, on the most visible parts of the Internet, nothing much will change, as most people will still be able to do their searches on Google and watch their favorite cat videos on YouTube with no sign of the internal overhaul that has happened within the company that manages these services. Page himself says Alphabet does not intend to be a big consumer brand that will turn out to be a household name like Google. Instead, it will simply be the umbrella company under which Google and its subsidiaries can operate independently, with the oversight of Alphabet when needed.

In a statement posted on Alphabet's website, cleverly named abc.xyz, Page says the creation of a new tech conglomerate will allow him and his partner Brin to focus on the development of moonshot projects that may not exactly entice investors while giving Google, the only profitable business in the company, more autonomy to grow and focus on its moneymaking endeavors.

"We've long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes," Page says. "But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant."

The restructuring is also a move to please investors, which have long hankered Google to be more transparent about its expenses and the profitability of its experimental projects. Alphabet will continue to trade under the existing GOOG and GOOGL stock tickers, and all Google shares will be transferred to Alphabet with the same rights, says Page. By the end of the fourth-quarter, Alphabet promises to provide a separate financial report for Google and its other businesses.

The company's founders have always said that there is no business model for growing a company like Google, but Page previously said that he admired the way Warren Buffett ran Berkshire Hathaway, which, like Alphabet, is a conglomerate that manages all kinds of businesses, from underwear to jewelry and now aerospace.

Under Alphabet will be Google X, the secretive moonshot labs responsible for Google's self-driving cars, delivery drones and Wi-Fi balloons. Nest smart thermostats, Google Fiber broadband service, Calico longevity research, Life Sciences glucose-reading contact lenses and Google Ventures startup investments will also operate under Alphabet as separate businesses from Google.

 

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