Alphabet Inc.

Last updated on 22 May 2017

Alphabet Inc. is an American multinational conglomerate created in a corporate restructuring on October 2, 2015. It is the parent company of Google and several former Google subsidiaries. The two founders of Google assumed executive roles in the new company, with Larry Page serving as CEO and Sergey Brin as President. The company is based in Mountain View, California.

Alphabet's portfolio encompasses several industries, including technology, life sciences, investment capital, and research. Some of its subsidiaries include Google, Calico, GV, CapitalG, Verily, Waymo, X, and Google Fiber. Some of the subsidiaries of Alphabet have altered their names since leaving Google—Google Ventures becoming GV, Google Life Sciences becoming Verily and Google X becoming just X. Following the restructuring Page became CEO of Alphabet while Sundar Pichai took his position as CEO of Google. Shares of Google's stock have been converted into Alphabet stock, which trade under Google's former ticker symbols of "GOOG" and "GOOGL".

The establishment of Alphabet was prompted by a desire to make the core Google Internet services business "cleaner and more accountable" while allowing greater autonomy to group companies that operate in businesses other than Internet services.

Alphabet Inc Logo 2015.svg
Alphabet Inc Logo 2015.svg

History

On August 10, 2015, Google Inc. announced plans to create a new public holding company, Alphabet Inc. Google CEO Larry Page made this announcement in a blog post on Google's official blog. Alphabet would be created to restructure Google by moving subsidiaries from Google to Alphabet, narrowing Google's scope. The company would consist of Google as well as other businesses including X, CapitalG, and GV. Sundar Pichai, Product Chief, became the new CEO of Google, replacing Larry Page.

In his announcement, Page described the planned holding company as follows:

Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main internet products contained in Alphabet instead. […] Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related.

As well as explaining the origin of the company's name:

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!

Page says the motivation behind the reorganization is to make Google "cleaner and more accountable." He also said he wanted to improve "the transparency and oversight of what we’re doing," and to allow greater control of unrelated companies.

On February 1, 2016, Alphabet Inc. surpassed Apple to become the world's most valuable publicly traded company until February 3, 2016, when Apple surged back over Alphabet to retake the position. Experts cited Apple's lack of innovation as well as increasing Chinese competition as reasons for the poor performance.

Website

Alphabet has chosen the domain abc.xyz with the .xyz top-level domain (TLD), which was introduced in 2014. It does not own the domain alphabet.com, which is owned by a fleet management division of BMW. BMW has said that it is "necessary to examine the legal trademark implications" of the proposals. It also does not own abc.com, which is the promoted domain of the Disney-owned American Broadcasting Company (though abc.com redirects to a subdomain of go.com, through which most of Disney's sites are hosted).

The website features an Easter egg in the paragraph where Larry Page writes, "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. We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure." The period after "drone delivery effort" is a hyperlink to "hooli.xyz", a reference to the television series Silicon Valley.

Structure

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Diagram of the structure of Alphabet Inc.

Alphabet's largest subsidiary is Google, but Alphabet is also the parent company to Calico, DeepMind, GV, CapitalG, X, Google Fiber, Nest Labs, Jigsaw, Sidewalk Labs, Verily and Waymo. While many companies or divisions formerly a part of Google became subsidiaries of Alphabet, Google remains the umbrella company for Alphabet's Internet-related businesses. These include many of the most widely used products and services long associated with Google, such as the Android mobile operating system, YouTube, and Google Search, which remain direct components of Google Inc. and were not made subsidiaries of Alphabet.

Proposed growth

Eric Schmidt said at an Internet Association event that there may eventually be more than 26 Alphabet subsidiaries. He also said that he was currently meeting with the CEOs of the current and proposed Alphabet subsidiaries. He said, "You'll see a lot coming."

Restructuring process

Alphabet was created as a subsidiary directly owned by Google Inc. The roles of these two companies – one as the owner and the other as the subsidiary – was then reversed in a two-step switch. First, a dummy subsidiary of Alphabet was created. Then Google merged with that dummy subsidiary while converting Google stock to Alphabet stock. Under Delaware law, a holding company reorganization such as this can be done without a vote of shareholders, as this reorganization was.

The restructuring process was completed on October 2, 2015. Alphabet retains Google Inc.'s stock price history and continues to trade under Google Inc.'s former ticker symbols "GOOG" and "GOOGL"; both classes of stock are components of major stock market indices such as the S&P 500 and NASDAQ-100.

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