Google has made an unexpected announcement today, revealing that the search engine giant will now operate under a new holding company former by CEO Larry Page, named Alphabet.
There’s a misconception that this will mean that the search engine itself will be changing names, but fear not: the Google experience for us users will remain largely unchanged (at least for the time being), with the search engine itself still being accessible through the same URLs. However, it will now be a subsidiary of parent company Alphabet, a baffling move that has nonetheless seen shares in the company spike mere hours after the announcement has been made.
Alphabet has received a new web address that, in keeping with the announcement, is similarly out of left field. Abc.xyz is the domain name for the brand new company, of which Larry Page will be the new CEO. Meanwhile, Sundar Pichai will head up Google in one of the most notable changes of this vast restructuring process.
In a blog post, Page wrote: “As Sergey and I wrote in the original founders letter 11 years ago, “Google is not a conventional company. We do not intend to become one.” As part of that, we also said that you could expect us to make “smaller bets in areas that might seem very speculative or even strange when compared to our current businesses.” From the start, we’ve always strived to do more, and to do important and meaningful things with the resources we have.”
Explaining Alphabet, Page continued: “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. 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. 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.”
In summary, Google as we know it has fundamentally changed, but the way we use the search engine will remain the same. This new announcement will likely lead to a variety of new developments in the near future, and we should plan to hear more about the other subsidiaries that will join Google under the Alphabet umbrella in the coming weeks.
