'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.'
Thus began an unexpected post from Larry Page on the official Google blog yesterday. Its purpose was to announce a brand-new company 'Alphabet Inc'. To say this took the digital industry by surprise would be something of an understatement. As the BBC reported: Google has unveiled a surprise restructuring, creating a new parent company. Under the rebranding, Google itself will retain its best-known businesses, such as search, apps, YouTube and Android. However, some of its newer entities, such as the investment and research divisions, the "smart-home" unit Nest, and the drone arm will be run under Alphabet.
"The whole point is that Alphabet companies should have independence."
Google founder Larry Page said it would create a simpler structure for what had become a diverse group of businesses. "This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google," he said in the blogpost. "Our company is operating well today, but we think we can make it cleaner and more accountable. The whole point is that Alphabet companies should have independence and develop their own brands."
Under this arrangement, Page will become chief executive of Alphabet, with senior vice president Sundar Pichai becoming CEO of Google. Mr Page's fellow Google co-founder Sergey Brin will become president of Alphabet. Google's new chief financial officer, Ruth Porat, will hold the same title for both Google and Alphabet.
"The name 'Alphabet' was chosen for two reasons."
According to Page, the name 'Alphabet' was chosen for two reasons, Mr Page said. It represents language, "the core of how we index with Google search", and because Alpha-bet means "investment return above benchmark, which we strive to do".
It's very easy to associate Google with search engines, and perhaps the Android operating system. But in fact, the tech giant owns 182 companies, from a robotics arm, and a thermostat firm, to a drone research lab and medical research foundation. With that sort of portfolio, clearly it was time to put some clear blue water between the money-making divisions (particularly search and Android) and the more speculative projects. In a nutshell, that's the purpose of Alphabet Inc.
The more cynical observer might suspect this is actually all about tax avoidence - something of which Google don't have the cleanest of records. But in fact, however unexpected, it appears the company is restructuring for genuinely creative business reasons.
Magnus Shaw, copywriter and blogger