Google is creating a holding company called Alphabet to hold all of its research toys and moonshot experiments — and, as Re/Code astutely notes, keep them from contaminating the margins of Google’s advertising business.
The announcement came out Monday afternoon, but the actual reorganization won’t be complete until later this year. Meanwhile, Alphabet has a clever new URL to check out: abc.xyz, where you can read Larry Page’s blog post about the new company.
After undergoing some legal/accounting black magic that’s described in Google’s SEC filing, Alphabet would trade publicly under Google’s current stock symbol, GOOG. Google itself would become a wholly owned subsidiary of Alphabet but would continue to report its earnings separately, with Google CFO Ruth Porat doing that job at both companies.
Page and Sergey Brin, Google’s founders, would become CEO and president of Alphabet, respectively, while Google Executive Chairman Eric Schmidt would hold that job at Alphabet.
Sundar Pichai, who’s been Google’s senior vice president of products, would become CEO of the “new” Google. It would be an ample reward for Pichai, who’s previously led successful, prominent projects such as Android and Chrome.
Here’s one way to think of the new structure: Alphabet would give Google a separate place for all the fun stuff like Nest, drones, and self-driving cars — the things that sound so awesome but might not really become real businesses. They’ll be separate companies under the Alphabet umbrella; comparisons to Berkshire Hathaway (maybe) or the EMC Federation come to mind.
Details about what would constitute the new Google are still fuzzy, but it would essentially be the grown-up part of the empire, housing the activities that are supposed to be real businesses. That would certainly include advertising, as well as — I’m guessing — Android, Chrome, YouTube (which counts as a “grown-up” just like the drunk uncle who swears a lot), and Google Cloud.