Yesterday, in a letter from CEO Larry Page, it was announced that Google, as a part of a corporate restructure, is now a part of the newly formed parent company Alphabet.
“So wait, someone acquired Google?”
Not exactly. Alphabet is a newly created company that is described as “mostly a collection of companies” by former Google CEO and now Alphabet CEO Larry Page, the largest of that collection being Google. This version of Google is now slimmed down. The other companies that make up the collection of Alphabet were formerly Google entities that have now been broken out into their own companies. These include companies like Calico, a company focused on anti-aging and longevity, and Nest, a company that provides solutions for your home like learning thermostats and smart fire alarms.
“Well then, what’s the point?”
From a structure standpoint, this means major changes. Along with the announcement of the new parent company, Page announced that Sundar Pichai, formerly the Senior VP of Android, Chrome, and Apps at Google, will take over as the new CEO of Google. Each individual company that is a part of Alphabet will also have its own CEO and operating structure. The biggest takeaway is that this allows the new, slimmer version of Google to focus on the products that we all most closely associate with it (Search, Ads, Maps, Android, YouTube and Apps) while the other companies will be independently operated under oversight of Alphabet.
“What about all that Google stock I own?”
Well first of all, lucky you. Google stock has been automatically converted into equal shares of Alphabet stock, but will still be traded under the name GOOG and GOOGL. After yesterday’s announcement Google stock jumped up 5% bringing it up over $700 per share. This morning has seen it come back down a little bit, but still up over 3.5% from where it closed last night. This jump can be attributed to investors being confident in the new CEO Pichai and also with the new structure as a whole. Previously, Google’s financial reporting was slightly clouded with all of their business efforts being thrown into the mix. Now, each company will have their own reporting, offering investors more transparency. This means Google X, most known for the Google Glass project and other high risk, “moon shot” projects, will report separately from Google, which will report separately from Nest, and so on.
“I’m running ads for my business on Google, will anything change?”
No, the way that you use Google in your everyday life will not change – for now that is. Google has been, and continues to be, so successful because of their willingness to innovate and change. This change in operating structure will allow Google to be as limber as ever and continue pushing the limits when it comes to its core products.
“Anything else I should know?”
Even with this major announcement, Google still has its sense of humor. If you are a fan of the HBO show Silicon Valley check out the hidden easter egg in the announcement letter, linked at the beginning of this article. Find the sentence that ends with “…our drone delivery effort” and click the period.
