‘Al­pha­bet’: new Google par­ent com­pany


Google un­veiled a sur­prise cor­po­rate over­haul Mon­day, form­ing a new par­ent com­pany dubbed Al­pha­bet to in­clude In­ter­net search and a hand­ful of in­de­pen­dent com­pa­nies.

Google chief ex­ec­u­tive Larry Page an­nounced the change, say­ing he would hold the same ti­tle at Al­pha­bet, the new hold­ing com­pany for the tech gi­ant’s newer ven­tures such as the re­search arm X Lab, in­vest­ment unit Google Ven­tures and health and science oper­a­tions.

Google will be one of the units, headed by the cur­rent com­pany vice pres­i­dent Sun­dar Pichai.

“Our com­pany is op­er­at­ing well to­day, but we think we can make it cleaner and more ac­count­able,” said a state­ment from Page, who co-founded the tech gi­ant with Sergey Brin 17 years ago.

“So we are cre­at­ing a new com­pany, called Al­pha­bet. I am re­ally ex­cited to be run­ning Al­pha­bet as CEO with help from my ca­pa­ble part­ner, Sergey, as pres­i­dent.”

Eric Sch­midt, the ex­ec­u­tive chair­man at Google, will tran­si­tion to Al­pha­bet with the same ti­tle, Google said.

Page said Al­pha­bet is “mostly a col­lec­tion of com­pa­nies,” the largest of which is Google.

Un­der the new struc­ture, “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.”

Al­pha­bet will in­clude units fo­cus­ing on life sciences prod­ucts, such as a glu­cose-sens­ing con­tact lens, and the health re­search firm Cal­ico, Page said.

Google X, which han­dles re­search on self-driv­ing cars and In­ter­net bal­loons, will also be a sep­a­rate unit.

Other units to be sep­a­rated in­clude the drone de­liv­ery pro­ject Wing, Google Fiber’s high-speed In­ter­net, the home au­to­ma­tion unit Nest and the in­vest­ment arms of the Cal­i­for­nia tech­nol­ogy gi­ant.

“Fun­da­men­tally, we be­lieve this al­lows us more man­age­ment scale, as we can run things in­de­pen­dently that aren’t very re­lated,” he said.

Strong Lead­ers, In­de­pen­dence

“Al­pha­bet is about busi­nesses pros­per­ing through strong lead­ers and in­de­pen­dence. In gen­eral, our model is to have a strong CEO who runs each busi­ness, with Sergey and me in ser­vice to them as needed,” Page said in his blog post.

Al­pha­bet Inc. will re­place Google Inc. as the pub­licly traded en­tity, and all shares of Google will au­to­mat­i­cally con­vert to shares of Al­pha­bet, with all of the same rights, Page said.

The new op­er­at­ing struc­ture “will be in­tro­duced in phases over the com­ing months,” ac­cord­ing to Google’s reg­u­la­tory fil­ing with the Se­cu­ri­ties and Ex­change Com­mis­sion, and will mean sep­a­rate fi­nan­cial state­ments from the Google unit and its par­ent.

Google will be­come a whol­ly­owned sub­sidiary of Al­pha­bet. The Google unit will in­clude the search en­gine, search ads, maps, apps, YouTube, An­droid and re­lated tech­ni­cal oper­a­tions, ac­cord­ing to the fil­ing.

The re­or­ga­ni­za­tion comes amid con­cerns that Google’s dom­i­nance of the tech sec­tor may have peaked as the land­scape evolves.

Google has for years been the leader in In­ter­net search and has turned advertising linked to those searches into a highly lu­cra­tive busi­ness.

But its shares have strug­gled since hit­ting an all-time high in early 2014 and it has lit­tle to show for ven­tures in other ar­eas: self­driv­ing cars, Google Glass, In­ter­net bal­loons, health care, Google TV, mo­bile pay­ments, home au­to­ma­tion and its Google+ so­cial net­work, among oth­ers.

“This is a pretty as­sertive move on their part,” said Bob O’Don­nell, who heads the con­sul­tancy TECH­nal­y­sis Re­search.

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