Huge inside shakeup as Google creates 'Alphabet' umbrella company

Let it never be said that Google is boring. Co-founder Larry Page today announced the creation of "Alphabet," a new corporation that will comprise Google and other previously Google-held properties to better allow them to act and grow independently. The change was announced across Google's collection of blog sites, as well as at the new (and cleverly domained) site

Page will serve as CEO of Alphabet. Sergey Brin, who co-founded Google with Page in 1998, will serve as president.

Shares of Google stock were up more than $30 a share in early after-hours trading.

So why make this huge business change? Page states:

We've long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant. Our company is operating well today, but we think we can make it cleaner and more accountable.

Alphabet will consist of a number of companies, of which Google will be the largest. Page says:

Alphabet 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. Our two classes of shares will continue to trade on Nasdaq as GOOGL and GOOG."

So why call the new company Alphabet? Again, Page says:

We liked the name Alphabet 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! We also like that it means alpha-bet (Alpha is investment return above benchmark), which we strive for! I should add that we are not intending for this to be a big consumer brand with related products--the whole point is that Alphabet companies should have independence and develop their own brands.

Some of the other companies that will be under the new Alphabet umbrella include its health businesses like Life Sciences and Calico, along with its X lab efforts. Each of these businesses will have its own CEO, which will receive guidance from Page and Brin.

The new Alphabet company has already launched its own website, but it's a pretty bare bones affair at the moment.

Update: In a Form 8-K filing with the US Securities and Exchange Commission, Google offered up some more info on the new Alphabet company structure, including confirming that Eric Schmidt will be the Executive Chairman for the new company. As expected, Android, YouTube, apps, search and maps will remain under the Google subsidiary. However, businesses like Google Fiber, Nest, Google X and others will be managed as separate subsidiaries.

The filing added:

Later this year, Google intends to implement a holding company reorganization (the "Alphabet Merger"), which will result in Alphabet owning all of the capital stock of Google. Alphabet will initially be a direct, wholly owned subsidiary of Google. Pursuant to the Alphabet Merger, a newly formed entity ("Merger Sub"), a direct, wholly owned subsidiary of Alphabet and an indirect, wholly owned subsidiary of Google, will merge with and into Google, with Google surviving as a direct, wholly owned subsidiary of Alphabet."

Source: Google, Alphabet

  • I think I like that name. Alphabet soup, and Google is the main ingredient. Posted via the Android Central App
  • Companies always make changes and try to move forward. It sounds like they are just trying to stay ahead of the game.
  • Plus everyone likes soup, so...
  • I buy almost everything except food and clothing from online auctions most people aren’t aware of the almost I unbelievable deals that they can get from online auction sites the site that has the best deals is >>> I checked with the BBB and was told that it is all legit. How they can sell gift cards, laptops, cameras, and all kinds of goodies that we all want for 50-90% off, I don’t know I do know that I bought my son an ipad there for less than $100 and my husband a $250 Low gift cards for $48. Why would I even think about shopping anyþlace else?
  • Plus It's also a way to avoid the Antitrust Laws and keep the U.S. From swinging the hammer of God at their company. It's all a huge legal move for protection.
  • Yep via AC App
    on VZW Moto X 2014/2013 DE/N7
  • Financial and Legality. Isolating and protecting each unit under Alphabet.
  • WHAT?!?! lol
  • Jokes right? April fools! Oh,wait...what? Posted via the Android Central App
  • That's what I thought when I first read that post ;)
  • A is for Android!
  • B is for Blogger!
  • C is for crazy news Posted via the Android Central App
  • D is for driverless cars.
  • T is for tax dodging.
  • Really? You couldn't at least say E is for Evading taxes? Posted via the Android Central App
  • You're hired!
  • Silly. T is for troll.
  • B is for beta
  • Would this also potentially mean a separation of Google + Motorolla to instead be moved under the more general Alphabet umbrella?
  • Motorola isn't owned by Google anymore. They are a Lenovo sub now.
  • His computer must be really slow, the date must say January 28th 2014. Posted via the Android Central App
  • probably largely a stock market play. by pulling the side projects like the self driving car and the glucose reading contact lens and the huge amount of money that is put into them in R&D from the main google company, the main google company will look significantly more profitable,
  • Bingo!
  • This also may make it easier to really see what each of the entities are doing financially and in real product/idea development.
  • This right cha
  • The stock is now Alphabet stock, so those numbers are still included in the valuation Posted via the Android Central App
  • Doesn't make a difference. Alphabet being the parent company will have to present consolidated financial reports for the conglomerate as a whole. Whether the individual businesses are up or down individually doesn't make any difference than it did before.
    Google being profitable is still offset by the other company's losses, so Alphabet overall is in the same position that Google was before this announcement.
  • Exactly it also means parts of the company that don't perform don't drag everyone else down with it! Executive pay and uppper management compensation is a big part of it. Also it means each piece has to report seperately... the losers will stick out and it will be much easier to say well we are selling off this or ditching that.
  • Google went up 30 points the day Alphabet was announced, that's huge for one day gains.
  • WTF?!
  • Wait, what? Posted via the AC App on Note 4 N910F (CM12.1)
  • This is how you maneuver around the tax man, guys.
  • Nothing wrong with that Posted via the Android Central App
  • Sure isn't. I do it everyday.
  • It must be an attempt to avoid more EU antitrust lawsuits as they move into other tech branches. Let's give a warm welcome to Alphabet. Posted via the AC App on Note 4 N910F (CM12.1)
  • They're making this really easy for the European Commission. Remember when Germany wanted to disband Google? Well, buy putting Google as part of a holding, they're just making that easier. Anyway, I foresee this as a strategy to bring into Google more companies without actually slapping the name Google into it. That way they pass the illusion that Google is smaller than it actually is. It's also easier to have separate companies under a common holding, since that'll make the closing and selling of flops easier than if companies continued to get integrated into the Google Corporation.
  • Actually, by doing this, they give less merit to the EU to disband Google since Alphabet is just an owning entity and each subsidiary has "independence"
  • Yet, they're all held by the same holding. And what the Commission doesn't seem to like is big companies owing a ton of stuff (unless they're Media holdings, in which case, !shush, we need the votes!").
    Which means it's easier for the Commission to force them to break apart. It will depend, of course, on the legal construction Google follows here. If Google itself starts to break itself into smaller independent companies, it may discourage the Commission. But if Google remains as it is and Alphabet is just an excuse to buy more and more companies, then there will very likely be a problem with the Commission.
  • I hope all this co-CEO stuff doesn't cause any issues. That structure was one of the reasons behind BlackBerry's decline. Posted via the Android Central App
  • Uh no... Don't go there lol. Posted via the Android Central App
  • Unfortunately it's true. Mike and Jim were fantastic business partners, but one wrong move and a slight division between the two was created, which led to infighting which led into bigger divisions, which led to more infighting and well... Yeah. Hopefully this doesn't happen again, but I worry that history is likely to repeat itself. Posted via the Android Central App
  • I bet the EU is very happy about this if it's not really April fool's day. Google may have just saved themselves from almost ending like Microsoft years back. Posted via the Android Central App
  • The name change is also an indicator that Google's real ambitions as an overall company is much bigger than we thought. They probably want to expand to many branches without having to deal with the legal obstacles. Posted via the Android Central App
  • This comment and your previous one don't seem like they mix well. Posted via the Android Central App
  • I was being sarcastic on the first comment. Lol. Posted via the Android Central App
  • Because there's NO way to denote sarcasm on the internet! /s See what I did there?
  • I guess the stock price was getting stagnant. Posted via the Android Central App
  • It's a protection move to separate all their companies and to separate Google mainly from other said companies they hold that were under the Google umbrella. Posted via the Android Central App
  • Exactly this way they are able to do damage control keeping any lawsuits or fines to that company and not effecting the others. Posted via the Android Central App
  • Which concerns me ... what is Google so worried about?
  • Wat. Wow. I realise that the (new?) name is Alphabet, but now that they're an umbrella corporation was anyone else's first thought Resident Evil? Just me? :D Posted via the Android Central App
  • I made the same joke on Twitter lol Posted via the Android Central App
  • Omg. Yes!!! They'll be the cause of the end of the world. Google buys a Pharmaceutical Company= a.k.a The Umbrella Corporation!!! Posted via the Android Central App
  • Well, they are working on life extension...
  • This is cool Posted via the Android Central App
  • 30 percent or 30 dollar ?
  • I think that this will allow the individual components of Alphabet to become more nimble. Each part will be able to make decisions within its own specialty instead of a massive company where all decisions have to run through.
  • Alphabet Central anyone? Posted via the Android Central App
  • Nice Posted via the Android Central App
  • Aint nobody got time for dat!
    just update your damn apps and stop releasing half baked products like *cough *cough Android TV you know that little device we call the nexus player
  • As someone said on another website they missed an opportunity to call it the Umbrella Corporation.
  • I have a wallpaper with the little green Android holding an umbrella. It's one of my wallpapers in my collection I use on my PC. Posted via the Android Central App
  • Umbrella Corporation confirmed! Posted via the Android Central App
  • Does this mean they've trademarked the Alphabet?
  • Just want them to build their own cell phone company with their own cell phone towers and put evilgreed obsessed companies like Verizon in check.
  • Alphabet Alpha Makes sense, doesn't it? Posted from a metal Nexus
  • I see this as an opportunity for job growth.
  • I got in the habit of doing this decades ago when I was learning web design as a way to steal^H^H^H^H^H learn code from various websites... View Source. I often find interesting things :))
    Take a look at the site and then View Source. You will find a funny hidden URL that takes you to what is essential a promotion for the HBO series Silicon Valley, where the fictional company Hooli is obviously Google. To wit: <p>Sergey and I are seriously in the business of starting new things. Alphabet will also include our X lab, which incubates new efforts like Wing, our drone delivery effort<a href=" " target="_blank" class="hidden-link">.</a> We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure.</p> Enjoy :))
  • Just saw the link to this from another site....very cool. Always gotta have a Google easter egg.
  • Having only had a phone for a long time I got out of the habit of viewing source of course. The main reason I did it on that w my Nightly is that the layout was so darn mid 90s simple looking , and there was all kinds of funny notations back then in things ... Ahh.. Perl scripts lol :)) I was pretty surprised to see that they'd linked to a show that portrays them so negatively , but fo all I know Goo^H^H^H Alphabet owns a piece of HBO :))
    And of courtse Easter Eggs for the win! Anybody rememvber the excel flight simulator? I'm trying to get this old NOOK I was given to run CyanogenMod so I have a "true" android device, but not having much luck. That's the reason I came here , because looks like people know their stuff
  • Is this the new front for the all seeing & all knowing M.I.B.
    Who's gonna be "Z". Posted via the Android Central App
  • At least it's not SkyNet...
  • This is meaningless news for most Google users and employees but big news for Cayman Islands, Switzerland and/or Luxembourg bankers.
  • I am surprised to see such a backlash including " higgh-profile " persons advocating ditching all things google to protect their privacy... And then posting said manifesto on their Facebook , Twitter , blog , websites , videos , inter alia... But then over the decades I've learned to noty pay attention to most tecvh coverage since I was too busy maintaining servers amd managing expectations lol :))
  • Okay....
  • so does this mean alphabet can buy t-mobile, let them grow as an independent with $$ to help the wireless industry grow. i mean as legere put it, he has mobile, and everything is going mobile, so as alphabet and project fi running off tmobile, it would make sense to fully integrate the two but let them grow independently.
  • Wow. It's so very clear to me that this company's culture is in a league of its own without exception.