Google late on Monday announced a major restructuring in a bid to bring order to the sprawling company.
The plan will see Google separate non-core operations from its Internet business and make them all – Google included – wholly-owned subsidiaries of a new parent company called Alphabet.
"Our company is operating well today, but we think we can make it cleaner and more accountable," said Google co-founder Larry Page, in a statement.
"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," he explained.
"We are not intending for this to be a big consumer brand with related products — the whole point is that Alphabet companies should have independence and develop their own brands," Page added.
From Q4 onwards, the company will implement segment reporting, where Google’s financials will be provided separately from those of other Alphabet companies, like its health businesses Calico and Life Sciences, for instance, or X lab, which works on emerging technologies like Google’s drone delivery service, Wing. Its venture capital operations, Google Ventures and Google Capital, will also become separate Alphabet subsidiaries.
Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with a ll of the same rights, said Page. Alphabet shares will continue to trade on Nasdaq under the same tickers, GOOGL and GOOG.
Page currently serves as Google’s chief executive, but under the new structure, he will become CEO of Alphabet, while Google’s other co-founder Sergey Brin will become president of the new company.
Meanwhile, Sundar Pichai, who until now has been Google’s senior vice president, will become CEO of the newly slimmed-down Google.
"[Sundar] has really stepped up since October of last year, when he took on product and engineering responsibility for our Internet businesses. Sergey and I have been super excited about his progress and dedication to the company," Page said.
He said Alphabet will ensure that strong CEOs are in charge of each business, with Brin and himself on hand to support them as needed.
"We will rigorously handle capital allocation and work to make sure each business is executing well," he said.
"We are excited to get to work with everyone in the Alphabet family," Page continued. "Don’t worry, we’re still getting used to the name too!"
