Google Creates New Company Alphabet Where Google Is A Subsidiary

Google Creates New Company Alphabet Where Google Is A Subsidiary

One of the largest companies in the world Google has announced it has had an organisational restructure, creating a new company Alphabet, of which Google will be a subsidiary.

B&T Magazine
Posted by B&T Magazine

The actual internet/search engine structure of Google will remain unchanged and will be a company underneath Alphabet, sitting alongside other non-online businesses Google currently undertakes. The new structure sees Alphabet become a collection of companies, in which Google is just one of them, albeit a large one.

The announcement was made via a blog post from Larry Page, co-founder of Google, both on the official Google blog as well as the new website for Alphabet.

Page probably puts it best in his blog post: “What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead.

“What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity).”

This means the company will be able to have more management control, and able to run various companies separate to Google, said Page.

Explaining the thought process behind the change, Page said companies have become comfortable making very small changes, however in a tech space changing as rapidly as the one today, “you need to be a bit uncomfortable to stay relevant”.

Running Alphabet will be Page as CEO and other Google co-founder Sergey Brin as president.

When co-founding Google 11 years ago, Page and Brin said: “Google is not a conventional company. We do not intend to become one.”

And the announcement today sure underpins this mentality.

“For Sergey and me this is a very exciting new chapter in the life of Google – the birth of Alphabet,” wrote Page.

“We liked the name Alphabet because it means a collection of letters that represent language, one of humanity’s most important innovations, and is the core of how we index with Google search!”

The model, writes Page, will have one CEO at the helm of each business, “with Sergey and me in service to them as needed”.

“We will rigorously handle capital allocation and work to make sure each business is executing well. We’ll also make sure we have a great CEO for each business, and we’ll determine their compensation.

“In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.”

When it comes to the stock market, Page said the name Google Inc. will be replaced by Alphabet Inc, will all shares converting to Alphabet. Google is now a subsidiary of Alphabet.

The two classes of shares, Google and Alphabet, will still trade on the US stock exchange NASDAQ under GOOGL and GOOG.

Read Page’s full announcement here.

Already Page’s Wikipedia page has changed to be the CEO of Alphabet, with a brand new page dedicated to Alphabet.