ABCs of Google’s new parent company and CEOs
Tech giant will be subsidiary of publicly traded umbrella firm
Tech giant will be a subsidiary of Alphabet, a publicly traded firm.
SAN FRANCISCO In a sweeping overhaul of how one of the world’s most powerful technology companies operates, Google is creating a new publicly traded parent company called Alphabet Inc. to house all of its disparate businesses.
Alphabet will be run by Google co-founders Larry Page and Sergey Brin, and Google will become a subsidiary of Alphabet with a new CEO: top Google executive Sundar Pichai.
“Our company is operating well today, but we think we can make it cleaner and more accountable,” Page wrote in a letter included in a regulatory filing on Monday afternoon.
The news announced after the close of trading on Monday took Wall Street by surprise. Google (GOOG) shares rose 6% in afterhours trading.
Alphabet will be a conglomer- ate, or “collection” of companies, the largest of which is Google. But Google will be “slimmed down,” excluding companies that are not part of its core Internet business.
Google will encompass the businesses that people typically associate with the brand, such as the Android and Chrome operat- ing systems, YouTube and search.
What will fall outside the slimmer Google: newer, more experimental businesses such as the Internet of Things gadget maker Nest, the high-speed fiber-optic Internet project Fiber and Google’s effort to extend human life with Calico.
There will also be two financial businesses: Google Ventures, the venture capital arm, and Capital, which invests in private equity deals. Google X, which is the company’s experimental laboratory, will be run separately by Brin.
The structure is similar to Berkshire Hathaway, Warren Buffett’s massive empire that has a portfolio of disparate businesses that specialize in everything from real estate to underwear.
It also gives Page the opportunity to step back from the day-today drudgery and focus on the bigger picture.
Page has long sought to reinvigorate the entrepreneurial culture inside Google. He also has taken steps with the hiring of new Google Chief Financial Officer Ruth Porat to be more transparent with investors. And, bottom line: Page appears ready to turn his attention to the next wave of technologies that Google is exploring.
Investors have been increasingly rattled by Google’s spending on its “moonshots,” projects such as driverless cars and delivering Internet access from high-altitude balloons. Now Google will keep those speculative businesses separate.
“That will put to rest some of the concerns that Google is overspending in non-productive areas,” BGC Partners analyst Colin Gillis said.