In the past couple of days there’s been a lot of confusion and misinformation surrounding Google’s announcement of their new parent company Alphabet. No, Google didn’t get bought out by another company. They simply did a massive restructure of their organization under a new conglomerate they named “Alphabet”.
In case it’s still unclear, here’s a great illustration of their new org chart. Notice Larry Page, co-founder and CEO of Google is now the CEO of Alphabet. Not much is going to change for the search engine you know and love. What’s mainly affected is how the parent company interacts with acquisitions.
Preventing Antitrust
The reason is very obvious to anyone that remembers United States Vs. Microsoft Corp. Microsoft got in hot water for violating anti-trust regulation. Google knows it’s traveling down a similar road as Microsoft and is launching a preemptive strike. With legal issues surrounding anti-trust violations in Europe already cropping up, this move is beyond smart for Google, ahem, Alphabet.
By making each of their acquisitions autonomous companies, these companies are free to have their own unique c-level leadership and can make purchases on their own. Google has been more than a search engine for a very long time and there’s no reason for acquisitions like Nest (a smart home device company) or Calico (a human longevity project) or even Fiber (a fiber optic company) to be associated with the Google brand or their search platform. In fact, by all being under the parent company of Google, any interactions between their companies could be seen as anti-trust violations. And, now the companies are able to operate as best they see fit, without affecting the Google image. Remember Google Glass and G+? Critical failures like these detract from Google’s reputation.
Making more room on the bus
Sundar Pichai is another reason for the formation of Alphabet. It’s no secret he was offered the top position at Twitter. This switch up means that he’s the new CEO of a “slimmed down” Google while Larry Page moves into the CEO role of Alphabet. Talk about finding a creative way to keep top talent.
Some have pointed out the restructure has resulted in a company eerily similar to the fictional “Umbrella Corporation” (featured above from Resident Evil. In the popular film series, Umbrella Corporation seems all nice and innocent by owning consumer brands and cosmetics while secretly operating much more nefarious and secret organizations. Let’s just hope that Alphabet never announces “M is for Monsanto”.
Fun fact, a hidden link on Alphabet’s new website (abc.xyz) gives a shout-out to the fictional version of Google from the HBO show Silicon Valley by linking to their website, http://www.hooli.xyz/#inspiration.
Diagram Image Business Insider.
Aplhabet Image Credit Protech.
