Google founders Larry Page and Sergey Brin have created a “collection of companies,” which includes Google, under a new holding company called Alphabet.
According to a letter to investors, Page will run Alphabet as CEO alongside its president Sergey. Sundar Pichai will be promoted from product chief to CEO of the slimmed down Google. A CEO will be appointed to each other companies in the collective.
Google is spinning out its businesses under the operational overhaul to become a wholly-owned subsidiary of newly created Alphabet. Companies not relevant to the Google’s internet products will be spun out into their own companies under the Alphabet umbrella.
The aim of the operating overhaul is to allow Google to focus on developing its own products, while enabling other Alphabet subsidiaries with the independence to further their own brands.
“Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related,” Page writes. “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 and me in service to them as needed.”
These include companies such as Fiber, Life Sciences, the team working on the glucose-sensing contact lens, and longevity-focussed biotech company Calico.
The control of X Labs, the technology incubator behind projects such as Google’s self-driving car and drone delivery project Project Wing, shifted from Google to Alphabet under the restructure.
As Alphabet Inc. will replace Google Inc. as the publicly-traded entity, Google shares will convert into the same number of shares of Alphabet. The two classes of shares GOOGL and GOOG will continue to trade on Nasdaq.
The upcoming Q4 results will introduce segmented reporting, meaning Google financials will be released separately from the other Alphabet businesses.
“For Sergey and me this is a very exciting new chapter in the life of Google—the birth of Alphabet,” Page writes. “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!”
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