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Google Is Restructuring Under a New Company Called Alphabet
Mark Wilson writes: Sundar Pichai is the new CEO of Google as the company undergoes a huge restructuring. Co-founders Larry Page and Sergey Brin are moving to a new company called Google Alphabet which will serve as an umbrella company for Google and its various projects. Google itself is being, in Page's words, "slimmed down" and the change is quite an extraordinary one. Page quotes the original founders' letter that was written 11 years go. It states that "Google is not a conventional company", and today's announcement makes that perfectly clear. There's a lot to take in...Google Alphabet is, essentially, the new face of Google. Page chose to make the announcement in a blog post that went live after the stock markets closed. This is more than just a rebranding, it is a complete shakeup, the scale of which is almost unprecedented.
A fellow had just been hired as the new CEO of a large high tech corporation. The CEO who was stepping down met with him privately and presented him with three numbered envelopes. "Open these if you run up against a problem you don't think you can solve," he said.
Well, things went along pretty smoothly, but six months later, sales took a downturn and he was really catching a lot of heat. About at his wit's end, he remembered the envelopes. He went to his drawer and took out the first envelope. The message read, "Blame your predecessor."
The new CEO called a press conference and tactfully laid the blame at the feet of the previous CEO. Satisfied with his comments, the press -- and Wall Street - responded positively, sales began to pick up and the problem was soon behind him.
About a year later, the company was again experiencing a slight dip in sales, combined with serious product problems. Having learned from his previous experience, the CEO quickly opened the second envelope. The message read, "Reorganize." This he did, and the company quickly rebounded.
After several consecutive profitable quarters, the company once again fell on difficult times. The CEO went to his office, closed the door and opened the third envelope.
The message said, "Prepare three envelopes."
First, the new parent company is just called "Alphabet" - not "Google Alphabet", as the summary claims.
Second, on the face of it this seems more like a rebranding than anything else. Nothing seems to be changing; they're just renaming "Google" to "Alphabet", and then repurposing the Google name to be used for one already-existing division within the renamed company. It doesn't sound like anything functional is really changing, which belies the idea this is a "massive reorganization".
#DeleteChrome
Google has been slowly changing from a dotcom tech company to a multinational conglomerate for a few years now. This is just them acknowledging that fact and structuring the company accordingly. This is similar to how United Aircraft became United Technologies in the 70s.
One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
The letter from Page could not be more clear. The new company name is Alphabet. Google is a wholly owned subsidiary of the new company along with YouTube, and other companies that will be created with their own CEOs.
GOOGL and GOOG stocks will continue to trade under those symbols, although the shares will actually be in the new Alphabet.
"He took a duck in the face at 250 knots." -- William Gibson, Pattern Recognition
Not so sure about that, it could become like Berkshire Hathaway where a single company controls multiple companies, each with their own publicly traded stock
Except that it couldn't be clearer:
"Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. Google will become a wholly-owned subsidiary of Alphabet."
From the blog post
Which is exactly what Spy Handler said.
Why not? Google invented web search.
It probably also goes some distance to protecting Google's product development from any threats against its advertising business by cranking regulators.
And courts. This helps to segment Google's advertising business so that if they get slammed by a government for refusing to censor, it's much harder to go after the parent company's assets. It's risk-management for shareholders.
The rumor on the Google blog is that Twitter was looking to offer Sundar Pichai a CEO position, so this move was made to keep him.
Perhaps there are some additional legal protections gained by doing this reorg as well.
-- Everything is wonderful until you know something about it.