Google founders Larry Page and Sergey Brin have created a “collection of companies”, which includes Google, under a new holding company called Alphabet.
Advertisement
“Google is not a conventional company. I am really excited to be running Alphabet as CEO with help from my capable partner, Sergey [Brin], as President”, Google co-founder Larry Page wrote in a blog post.
With the major restructuring announcement yesterday, Alphabet launched abc.xyz as its domain name. Google founder Page said Alphabet wouldn’t be introducing products under its own name, so it wouldn’t be a public facing name like Google.
As the company explained in its filing to the US Securities Exchange Commission on Monday, the “Google Business” will be home to the company’s search engine, ads business, maps, applications, YouTube and the Android operating system.
A trademark owner needs to prove that the new Alphabet creates a “likelihood of confusion” among consumers between two brands to support a trademark infringement, which happens when both companies are offering similar products and services. “We [have done] a lot of things that seemed insane at the time”, Page said, noting that the Alphabet strategy gives Google more flexibility to innovate. “Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related”, Page said. Google’s venture arm has made investments and acquisitions much earlier and more diverse than what many corporate venture tech companies have done.
The new structure reflects the way many old economy corporations work, with a central unit acting as an umbrella to relatively independent business units focused on specific areas. However, those shares will still trade as GOOGL and GOOG on NASDAQ.
The upcoming Q4 results will introduce segmented reporting, meaning Google financials will be released separately from the other Alphabet businesses. Google still exists as a company but will now be part of a larger entity with broader ventures than search and advertising. One take is that it is a clumsy attempt to rebrand itself following the success of Google.
Google shares rallied some six percent in after-hours trading on the news to $672.
On the reverse, there had been concerns that the dominance of Google in its sector had reached its peak.
Advertisement
Ultimately the money allocation is still a decision that belongs to Page, but a similar risk of clashing could come from each CEO wanting more funding for their own projects and if someone gets left out that is likely to cause some friction.
