Google Surprises Everyone By... Breaking Itself Up (Kinda)

from the huh? dept

For years, there have been efforts by various competitors and governments to try to break up Google. But now the company appears to have done it itself. Sort of. Taking basically everyone by surprise, Google announced that it has formed a new "holding company" called Alphabet, and made Google a wholly owned subsidiary of Alphabet, while at the same time carving out other businesses from Google and making them separate from Google, but still under the purview of Alphabet. The whole thing is... weird. There's lots of speculation going on as to why, and no one seems to agree. Larry Page's letter suggests it's to allow the overall company to be more innovative -- which actually is a legitimate possibility. Just this morning we noted that Google's failure with Google+ shows how the company can sometimes lumber around things while startups are much more nimble. Splitting the company into totally separate entities (even if owned by the same holding company) at the very least has the possibility of forcing the separate units to focus on executing on their own businesses, without worrying about stepping on the toes of other businesses. But... it also loses the ability to cross-subsidize parts of the business.

Others have speculated that this was also a way to "reward" top execs like Sundar Pichai, who is now Google's CEO -- while Larry Page becomes CEO of Alphabet (and Sergey Brin is President of Google). Even if he's still reporting to Larry, having "Google CEO" on the business card has to be seen as a promotion.

The only other thing that came to my mind was that this was some sort of reaction to all those lawsuits and investigations into possible anti-trust. Not that reorganizing the company is going to "fool" any regulator, but at the very least, it perhaps sets things up in a manner that if regulators try to break up Google, there are preset "fissures" that allow Google to "direct" the cuts more strategically.

Frankly, the whole thing seems to be leaving a lot of people scratching their heads (myself included). It may turn out to be nothing beyond just a different take on a corporate restructuring -- or it may be a prelude to the company doing something much bigger that would fit much more readily into this holding company structure.

Oh, and in case you're wondering, the company (for now at least) has taken the URL abc.xyz and it includes a weird little Easter egg, giving tribute to the fictional Google-like company in HBO's Silicon Valley, Hooli.

Filed Under: holding company, larry page, restructuring, sundar pichai
Companies: alphabet, google