To do that, Page and co-founder Sergey Brin are planning to give Google a new parent company called Alphabet.
Page said in a blog post the move was done even if Google was operating well because “we think we can make it cleaner and more accountable”.
The company’s X lab, responsible for developing initiatives such as drone delivery business Project Wing, will now operate under Alphabet, as will its Life Sciences division, which is developing a glucose-sensing contact lens. The new structure is kind of like the tech version of Warren Buffett’s Berkshire Hathaway Berkshire Hathaway, which has a host of operating segments alongside its insurance operations and investment portfolio.
“Alphabet is about businesses prospering through strong leaders and independence”.
Alphabet will be a giant conglomerate, of which the largest will be Google itself. The Google co-founder added that the name also refers to “alpha bet”, on which alpha means an investment term used to describe returns that are above the set benchmark. “We believe this allows us more management scale, as we can run things independently that aren’t very related”. Longtime Google executive Sundar Pichai, who has taken on increasingly important roles at the company in recent years, will be CEO of the core Google business. First is the core Google brand, which will retain control of Android, YouTube, search, and maps, among other businesses. Companies not relevant to the Google’s internet products will be spun out into their own companies under the Alphabet umbrella. The two classes of shares GOOGL and GOOG will continue to trade on Nasdaq.
Over the years, Google has been increasingly ambitious about expanding its scope of products beyond its juggernaut search engine.
He is the second person of Indian origin to head a major IT company after Hyderabad-born Satya Nadella who became CEO of software giant Microsoft in February 2014, succeeding Steve Ballmer.
Google shares rallied some six percent in after-hours trading on the news to $672.
The radical organizational shift is something similar to the way companies like General Electric are organized, with a command center of sorts that’ll act as the Central Processing Unit to oversee and manage activities such as finance and other independent business activities. All it consists of right now is a letter from Larry Page and a link to Google’s existing investor relations page. Here’s more on what the overhaul means for Google.