Google, whose name became synonymous with internet search, is reorganizing to maintain its innovation and competitiveness. The company is being reinvented as Alphabet, a holding company for businesses that are "far afield" from its main Google business so that they can be handled independently. The company will also contain the main Google business unit which will retain the Google name.
“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,” said Larry Page, CEO of Google, in an August 10 blog post in the Investor Relations section of the Google website.
Page described the reorganization as part of an effort to avoid getting too comfortable, observing that in the tech industry, “where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.”
Page said in the post that the company is operating well now but that it can still be improved, and so it is creating Alphabet. Page will run Alphabet as CEO with help from his partner, Sergey Brin, co-founder of Google, as president of Alphabet.
The change is also an acknowledgement of the transformation of the company well beyond search since its founding in 1998, with businesses that today span from Gmail to Chrome, advertising to cloud computing, and even wearable tech.
The name “Alphabet” for the new public holding company was chosen “because it means a collection of letters that represent language, one of humanity's most important innovations, and is the core of how we index with Google search” as well as “alpha-bet (Alpha is investment return above benchmark), which we strive for,” said Page.
“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.”
According to papers filed with U.S. Securities and Exchange Commission, under the new structure, the company’s main Google business will include search, ads, maps, apps, YouTube and Android and the related technical infrastructure. Other businesses “such as Calico, Nest, and Fiber, as well as its investing arms, such as Google Ventures and Google Capital, and incubator projects, such as Google X, will be managed separately from the Google business.”
In addition to Page becoming CEO of Alphabet, and Brin becoming president, Eric E. Schmidt will become the executive chairman of Alphabet, Ruth Porat will become the senior vice president and CFO of Alphabet, and David C. Drummond will become the senior vice president, corporate development, chief legal officer and secretary of Alphabet.
Page, Brin, Schmidt and Drummond will transition to these roles from their positions at Google, but Porat will also retain her title as the CFO of Google. In addition, Sundar Pichai, currently the senior vice president of products at Google, will become the new CEO of Google Inc.
Still, the change will not be made without a bit of controversy. The New York Times reported that both the trademark for the name Alphabet as well as the domain name Alphabet.com is owned by German car manufacturer BMW which has no plans to sell either. "One can only assume that before Larry Page and Sergey Brin chose Alphabet as the name for their new holding company, they Googled it," writes Jack Ewing of the Times, but goes on to point out that the fact that one company is using a name does not necessarily mean that another cannot use it also since "trademark infringement occurs if another company’s use could create confusion with consumers, according to the United States Patent and Trademark Office." Google's new Alphabet entity uses the domain name: https://abc.xyz.