Google Founders Create New Company Called Alphabet

In his post, Page explained that restructuring the company would provide better management scale by running unrelated projects independently.

GOOGLE, founded as an Internet search company, has expanded into so many diverse areas – including the music business – that the company has decided to reorganize under a new name – ALPHABET – and separate its moneymaking businesses from its newer upstarts. Sundar Pichai, who has effectively been leading Google’s day-to-day operations, will step into the CEO role.

Each company under Alphabet will have its own CEO.

Google announced a major shakeup this week as company founders announced the creation of a new overarching firm called Alphabet Inc.to oversee and manage the Mountain View tech giant’s various ventures.

Together, Page and Brin want to ensure each of the spin-off businesses will have adequate funding and suitable CEOs.

Alphabet will continue to trade under the GOOGL and GOOG ticker symbols when the change kicks in later this year. Despite the reorganization, Google will continue to develop new products within the subsidiary, such as the recently launched Google Photos and Google Now.

“Our company is operating well today, but we think we can make it cleaner and more accountable”, he said. They will all report to Alphabet CEO (former Google chief) Larry Page, who has been a longtime admirer of Buffett’s managing style.

“There is certainly a strong case for the move providing more protection to the Google brand”. Each of these businesses will have its own CEO and business strategy. Google Ventures, the research department that goes by the name of Google X and the division dedicated to life sciences will be owned by Alphabet.

“Google itself is also making all sorts of new products, and I know Sundar will always be focused on innovation-continuing to stretch boundaries”, Page said.

These other parts are the companies that “are pretty far afield” from Google and Google products.

Google’s current subsidiaries include Google Maps, YouTube, the Chrome browser and operating system, and Android mobile phones.

Analysts said the move may also be a nod to Wall Street demands for more fiscal accountability: As part of the reorganisation, Mr Page said the company will begin reporting financial results by segments.

The real benefit to Google from the organisational rejig, in addition to appeasing investors to some degree, could be pre-empting further antitrust issues that could surface down the line.