Google Restructures and Becomes Alphabet

  • Aug. 13, 2015

On august 10th, Larry Page, CEO of Google, announced that Google will now become the most important independent business unit of a new holding society : Alphabet.

But why?

In the past, Google has diversified its portfolio by acquiring and creating businesses. However, these did not necessarily fit with Google's core business model.

Google's executives Larry Page & Sergey Brin have restructured the company so that each business unit will have separate leadership with his/her own culture under the Google banner. This restructure reassures Google's investors, who are sometimes apprehensive about the company's projects. 

Since the change was implemented, Alphabet shares have jumped 5%!

Larry Page wrote the following on Alphabet's home page:" As Sergey and I wrote in the original founders letter 11 years ago, "Google is not a conventional company. We do not intend to become one.

What does the new structure look like ?

Google will always be the center of the company (90% of the revenue), regrouping all its traditional activities :

  • Google Search Engine
  • Advertising (Adwords, AdSense)
  • Android Mobile Operating Software
  • Google Chrome Browser
  • Google Applications or Google Apps (Youtube, Analytics, Earth, Maps, Gmail, etc…)

Here are the remaining business units that will fall under Alphabet (10% of the revenue)

  • Calico : A Biotech Firm
  • Google Ventures & Google Capital : Two Investment Societies
  • Nest : An Automation Company
  • Fiber : A Telecommunications company developing Fiber Optics infrastructure
  • X-Lab : A startup incubator

Administration Shakeup

Sundar Pichai, Google's previous VP of Group Products became the new Google CEO.

"Since his arrival at Google in 2004, Sundar has participated in the development of several key consumer products that are now used by hundreds of millions of people". Blurb of a SEC document.

As for Alphabet, Larry Page became the CEO and Sergey Brin the President.