Google co-founders Larry Page and Sergey Brin have announced a huge organisational change to the way their company will be run with the creation of a new parent company called Alphabet, of which Google will become a fully owned subsidiary. Distancing themselves from the day to day operations of Google, Page and Brin will take up the positions of CEO and President of Alphabet respectively. Taking control of Google is Sundar Pichai who will be taking on the role of CEO.
The slimmed down Google headed by Pichai will encompass the businesses that the everyday user has come to associate with the brand. The Google search engine, YouTube, Google Chrome and the Android mobile operating system will now be the only businesses remaining under the Google umbrella. Page said that this, “slightly slimmed down Google” will have greater focus under Pichai’s management. For everyday users, it seems that for the present at least there will be very little change to the way the core brand will operate.
Meanwhile, Alphabet will take over Google’s more ambitious and experimental businesses such as the high-speed fiber-optic internet business that is Fiber and the independent research and development biotech company Calico. Also falling under the Alphabet umbrella will be two financial businesses, Google Capital which invests in private equity deals and Google Ventures which is the company’s venture capital arm. The company’s experimental laboratory Google X will be run by Brin as a separate entity.
Late last year in an interview with the Financial Times, Page stated that “There is no model for the kind of company Google wants to become. But if there’s a single person who represents many of the qualities I think will be needed for the task ahead, then it’s Warren Buffett”. Mondays announcement seems to be the first step in transforming Google into something akin to Berkshire Hathaway, the massive empire built by Warren Buffet with a disparate portfolio comprising of businesses ranging from real estate to underwear. Stepping into their management positions at Alphabet will give Page and Brin the opportunity to look more at the bigger picture as they oversee their group of semi-independent businesses of which Google will be the largest.
When the announcement was made after trading hours on Monday afternoon the stock price rose significantly. Although it has now steadied it will be interesting to see if this restructuring will affect the markets opinion in the coming weeks and months especially as Alphabet and not Google will be the publicly traded entity. The views of Google’s other executives and investors are also as yet unknown and Google spokeswoman Gina Scigliano has so far declined media comment.