Yesterday Google announced that it was going to be completely restructured and sit as a subsidiary of its new parent company, Alphabet.
Many of Google’s side businesses will now be housed under Alphabet, and as part of the shuffle Sundar Pichai has now been named as CEO of Google, and Larry Page and Sergey Brin will now serve as the CEO and President of Alphabet, respectively.
Google’s reason behind the restructuring is that the company had become too diverse, and for the individual business to flourish successfully it would be better to split them up under a new parent company.
While Google will retain its best known businesses, including Chrome, Maps, YouTube, and Android, some of its newer entities, such as Nest and Calico, will be run under Alphabet.
Larry Page said of the change:
As Sergey [Brin, co-founder] 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.
According to Page, the name Alphabet was chosen for two reasons. First, because it represents language, “the core of how we index with Google search”, and second, because Alpha-bet means “investment return above benchmark, which we strive to do”. Even the site’s new URL is unconventional – https://abc.xyz/.
Alphabet’s companies will include, but are not limited to, Google Inc., Calico, Google Ventures, Nest, Google X, Fiber, and Google Capital.
Page said they feel the restructure will make the company “cleaner and more accountable”. The hope is that Google’s side projects will have room to thrive individually without interference.
What does this mean?
For now Google’s search functionality is going to stay the same. Google as we know it won’t change, and consumers can still use consumer facing services such as Maps, Gmail, and YouTube as if nothing has changed.
In fact, these areas may now be given more attention and they may be improved. This new restructure is most likely to affect us when the projects housed under Alphabet really start to develop and grow their own wings.
Talking of Wings, Google’s new drone service is part of Google X, the Life Sciences division of Alphabet.
Other potential life changing research from this company include contact lenses that can measure blood glucose levels, synthetic skin that can detect cancer early on, a self driving car, and of course Google Glass.
Calico is a health research lab headed up by Art Levinson, Nest is a connected-home business lead by Tony Fadell, Fiber is a fast internet service, and Google Ventures is its venture-capital division. Google Capital is a late-stage investment unit, and Sidewalk is a fairly new urban technology project being lead by Dan Doctoroff.
Page was no longer interested in the small details needed to run Google, such as cost-per-click or changes to Gmail, he wanted to work on big changes that could alter the world as we know it. He said:
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.
It’s going to be very interesting to see how the creation of Alphabet affects us moving forward and what changes, if any, we will see from the newly slim-lined Google.
Giving all these companies an independent focus could transform the way we live and work, turning the world into a safer and better place.