Diversified internet company Google is set to bring its strategic investment arms under a new holding company called Alphabet as part of a vast corporate reorganisation, it revealed yesterday.
The reorganisation will involve all of Google’s current activities being incorporated into Alphabet, which will take over Google’s public listing and be run by co-founders Sergey Brin and Larry Page.
Many of Google’s current divisions, including its drone subsidiary Wing, its Life Sciences division, its Calico longevity unit, cable and TV service Fiber, smart home product manufacturer Nest and Google X, the company’s top secret experimental facility, will be split off into separate companies under the Alphabet umbrella.
Google’s corporate venturing unit, Google Ventures, and its growth capital arm, Google Capital, are among the parts of the company that will now be run under the Alphabet banner, though it is unclear whether either will change their name.
Page said in a blog post yesterday: “Sergey and I are seriously in the business of starting new things. Alphabet will also include our X lab, which incubates new efforts like Wing, our drone delivery effort. We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure.”
Google itself will operate as a slimmed down subsidiary of Alphabet that incorporates its more traditional core online businesses, such as its search engine, online advertising, Google Maps, apps, video streaming site YouTube and mobile operating system Android.
Sundar Pichai will take on the CEO role at Google, having risen through the company’s ranks since 2004, most recently taking the reins as product chief in October 2014.
Page explained: “Fundamentally, we believe this allows us more management scale, as we can run things independently that are not very related. Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed.”
In addition to giving each unit more autonomy, the move is reportedly also being made to give investors more clarity on the conglomerate’s capital allocation plans, but the placement of Google Capital and Ventures in Alphabet is significant in terms of the division between the internet-focused Google business and the rest of its activities.
Both units have diversified their investments in recent years, with life sciences and genomics becoming increasingly important, so it is perhaps not beyond the realms of possibility that the new, slimmed down Google may launch a third, more specialised corporate venturing subsidiary in future.