Google will be restructuring under a newly-formed holding company called Alphabet, separating its core offering from its experimental ventures.
Announced last night in a blog post by co-founder and CEO Larry Page, the move will make Google a wholly-owned subsidiary of Alphabet. The new company will replace Google as the publicly-traded entity, with all Google shares converting to shares of Alphabet.
Google itself will still continue to own and operate many of its internet-based companies and services, including YouTube, Android and the core search engine, as well as the advertising services that fund them, like AdSense and DoubleClick.
What has changed is that its more ambitious projects will now operate as separate companies within Alphabet. These include tech development wing Google X (which developed Google Glass, drone delivery service Wing and the Google self-driving car), biotech research company Calico, home automation company Nest Labs and venture capital investment arms Google Venture and Google Capital.
While the restructuring isn’t likely to have an immediate impact on day-to-day operations of Google’s services, it addresses a common concern from investors that the company’s experimental ventures have negatively impacted its overall earnings. Page wrote in the blog post that the move will improve transparency, and segment reporting will be implemented for Q4 results that will present Google’s financials separately from other ventures. Google stocks were up by more than 6% on the NASDAQ this morning.
Page also stated one of the benefits of the new structure is giving each of the companies its own CEO to improve leadership and independence, allowing more room to grow as individual brands and “getting more ambitious things done.”
Once the restructuring is completed, Page will become CEO of Alphabet, with fellow co-founder Sergey Brin (currently director of Google X and special projects) taking the role of president. CFO Ruth Porat, as well as former CEO and current executive chairman Erin Schmidt, will maintain their roles in Alphabet. Sundar Pichai, the senior VP of products who has been running services like Chrome, Android and Drive, will take over as Google’s CEO. The company’s regional heads, including Google Canada managing director Sam Sebastian, will maintain their positions.
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