Windhoek
If you’ve not heard of a firm called Alphabet, don’t worry. Neither had most people in the world by Monday this week when Google announced major restructuring of its operations.
However, analysts are still stunned and speculating that much more than a renaming, the reshuffle at the search-driven US technology group, suggests there is more going on than meets the eye.
It may seem like a simple name-change, but the reality is more complicated. According to Google co-founder and CEO Larry Page “Alphabet Incorporated (Inc.) will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. Google will become a wholly-owned subsidiary of Alphabet.”
Confused? You’re not alone. When all is done, Google will become a wholly owned subsidiary of Alphabet, the new holding company headed by Page as the CEO, Google co-founder and Sergey Brin as president of Alphabet.
Sundar Pichai, who until recently held responsibility for product design and engineering at Google, is the new CEO of Google.
As to the question of what is Alphabet, Page offered this helpful answer: “Alphabet is mostly a collection of companies.”
“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 [Brin] 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,” says Page.
Analysts are trying to uncover the unspoken benefits the restructuring brings Google. The reshuffle may provide the company a bit of insulation from regulatory issues, particularly in the European Union.
Google itself is still a massive beast, which will have to tread carefully around regulators, but it will be easier to present firms such as Nest, Calico and Fiber, as separate entities if they are united by a common owner. If the worst happens for Google, it would be easier to hive off the subsidiaries entirely.
The old Google isn’t going anywhere, as almost every aspect of Google that typical consumers interact with will remain part of the new, lighter, Google 2.0. That includes YouTube, Android, Maps and Gmail, as well as the company’s search and advertising businesses.
There are no immediate changes for the vast majority of Google’s customers, who only use services that will stay firmly under Google’s branding. YouTube, Gmail, search, Maps, ads, Android, photos, and more will be functionally no different from how they exist today.
As to why the techno geeks at Google chose the name Alphabet, – it is a mixture of terrible jokes, grand ambition, and carefully studied banality. The pun comes from the fact that “alpha” is a financial term meaning return on investment above the benchmark, making Alphabet a good Alpha-bet.
The ambition comes from the fact that the alphabet is one of humanity’s most important inventions, as well as the implicit claim that it encompasses everything from A to Z. The banality comes from the fact that Alphabet is perhaps the most generic name imaginable, perfectly standing for anything and nothing at the same time.
– Additional reporting by The Guardian