Alphabet: Google’s New-Born Parent

12th August, 2015 by

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The CEO and President of Google have formed tomorrow’s largest tech company. Read about what Alphabet is and how it will affect Google.

It’s almost hard to believe: the tech giant that operates the world’s largest search engine and web browser now has a company above it. However, this isn’t because anyone bought them out or struck gold. In fact, it’s the opposite. The co-founders have stepped away from Google to create something even bigger…

Larry Page and Sergey Brin founded Google in 1998 while studying at Stanford University. The company was an instant success, and Page, Brin and 8 employees left their office that had doubled as a garage to expand only a year after it launched. Since then, Google has consistently sat at the top of the tech world, currently employing over 50,000 people and raking in around $58 billion a year.

On Monday (August 10, 2015) Page and Brin announced that they’d be stepping down as CEO and President of Google to pursue Alphabet, Google’s new “parent” company. Alphabet will be a holding company for Google and all other associated branches, meaning Alphabet will preside over several other companies, with Google as a smaller company within Alphabet’s hold.

Android, Google (the search engine), Maps, Google Play, App Store and YouTube will still fall under the Google name, but other companies like Fiber, Calico, Life Sciences and Google X will sit below Alphabet. This change will “slim down” Google, making it more refined and keeping it close to its root values of organizing the world’s information.

Who will be the new CEO of Google ?

Sundar Pichai, Senior Vice President of Google, was chosen to replace Larry Page as CEO. Page said that Pichai was “the natural choice to lead Google” and that he’ll continue to make big strides on [Google’s] core mission. Pichai seems to be the perfect fit as the new CEO of Google. He has already led several consumer products since joining Google in 2004, including Android and Chrome, and has been called “the man behind Google’s most important products”.

What is Alphabet planning?

With this being such recent news there’s still a lot of unanswered questions surrounding Alphabet. If you visit the site at abc.xyz you’ll find a press release written by Larry Page himself, outlining why he decided to start Alphabet and what his intentions are moving forward.

He starts out by reminding everyone what he and Sergey Brin wrote in the founder’s letter 11 years ago:

“Google is not a conventional company. We do not intend to become one. [You can] expect us to make smaller bets in areas that might seem very speculative or even strange when compared to our current businesses.”.

Looking at some of Google’s creations such as Android and Chrome, it’s easy to see they’ve stuck to their roots. The construction of Alphabet seems to be no different. This is a bold move by Page and Brin, but it’s hard to imagine that anything but success will come from this unique business venture.

For now, it looks like Alphabet will mainly be in charge of managing Google, along with the other corporations we mentioned earlier in this post. The idea behind Alphabet is that it will actually clean up Google by allowing more of a focus on the search engine side of things, while also making room for more advancements in other related fields. Each company owned by Alphabet will have its own CEO, with Page and Brin being close by to assist.

How will things change on Wall Street?

Alphabet Inc. will replace Google Inc, meaning all shares of Google will automatically convert into the same number of shares of Alphabet. By doing this, Google will become an entirely-owned subsidiary of Alphabet Inc. Their classes of shares will continue to trade on Nasdaq as GOOGL and GOOG.

Google shares skyrocketed following the big announcement, making Alphabet and Google the talk of Wall Street. Heather Bellini of Goldman Sachs said:

“[The new structure] shows their desire to increase transparency which we’ve highlighted as a key issue for Google to address. [This] should help bring clarity to any profitability drag caused by its non-core assets and their trajectory.”.

Is this the end of Google?

Judging from Page’s remarks in the press release this is absolutely not the end of Google. Instead, it’s a step forward in making Google an even stronger search engine, media channel, browser and smartphone operating system.

Larry Page and Sergey Brin will continue working with Sundar Pichai to strengthen Google and all of its entities. As far as we can tell, the biggest difference is that they will additionally be involved with companies working on healthcare research, drone delivery, autonomous cars and broadband internet/cable television services.

Google is not dead. Alphabet is just alive.

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