In a move that has surprised, well, pretty much everyone, internet search giant Google has announced they're starting a new company. Sort of. The now former CEO of Google, Larry Page, announced in a blog post on Monday that Google is creating a new parent company to be called 'Alphabet'. Page will become the CEO of Alphabet, which will oversee the operations of all of Google's various properties, including Google, Nest and Calico, among others. Rather than having all these various projects aligned under the one Google banner, Alphabet will enable oversight on all as their own separate entities.
From Page's 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). Fundamentally, we believe this allows us more management scale, as we can run things independently that aren't very related."
It's an intriguing move from Google - or should I say, Alphabet - and one which, as of right now, no one seems to know for sure how it will impact on the company's wider operations.
From a Google standpoint, Sundar Pichai takes over as the CEO of Google, taking over from Page. Pichai had been touted by some as a possible CEO candidate for Twitter, but that's likely off the table now, with Pichai taking the reigns at the biggest element of the new entity. Susan Wojcicki will remain in her position as the CEO of YouTube.
What does this mean for the wider online world and the digital landscape? Probably not much, other than adding a new entity into the mix. Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all Google shares will automatically convert into the equivalent number of Alphabet shares. Google will become a wholly-owned subsidiary of Alphabet and the two classes of Google shares (GOOGL and GOOG) will continue to trade, though now as Alphabet stock.
The main focus of the change seems to be on focus and transparency. According to The New York Times, investors have expressed concerns that Google has been distracted from its core web search business in recent years, opting instead to focus on pursuing projects fancied by the company's founders like self-driving cars and robots. Under this new structure, each company will have a dedicated focus within the wider company portfolio, which enables Page and Co, as the leaders of Alphabet, to oversee such investments in a more individually focused manner, rather than plugging various new elements into already established and successful enterprises.
The change will also provide greater financial transparency, with Alphabet breaking out the financial results for Google Inc, as well as the overall company. This will separate Google's core business results from their many other investments, giving market watchers a better view as to how Google's services are performing, without the distraction of its various other incorporated elements.
While the change has come as something of a surprise, it makes sense when viewed in the wider context of these aims. But rest assured, Google will remain as a search service - you're not going to see 'Alphabet Chrome' or 'Alphabet+' suddenly appear where your once trusty Google products once resided anytime soon. Also, by opening up the company to a more portfolio-based management system, it might enable Google to look at new strategic investments within that wider framework - like, maybe, Twitter?
So Google is now an Alphabet company. Weird huh? But don't worry, as Page notes in his introductory post: "we're still getting used to the name too!"