In an unexpected turn of events, Google announced a massive restructuring of the company in a letter to investors today.
In the letter, Google co-founder Larry Page outlined the changes coming to the tech giant, starting with the formation of Alphabet Inc. This new company will now be the parent company for Google. It will also form an umbrella over other formerly Google-owned companies such as Nest Labs and Calico Labs, the latter of which also contains Google X as well as others. YouTube will remain a property of Google proper and Susan Wojcicki will remain it’s CEO.
Page will move into position as CEO of Alphabet Inc., with Google co-founder Sergey Brin moving to being President of the new parent company. Sundar Pichai will replace Page as CEO of Google. Page spoke well of Pichai, who joined the company in 2004, saying he had “really stepped up since October of last year”, when he had become Product Chief.
The letter paints this as creating a Google that is “slimmed down”, according to Page. The changes should allow each part of the company to better focus on its own goals, to “have independence and develop their own brands”. The long time CEO also mentioned a list of items they were looking forward to, including the ability to empower business start ups, “improving transparency”, as well as “taking a long-term view”.
As for the new company, Alphabet takes on two meanings. It both represents the various alphabets that makes up languages as well as alpha-bet, where an investment makes a return above expectations. Page stated these are some of the reasons that drew Brin and him towards the name. Interestingly, Google’s various properties also help form the letters of the English alphabet (G is for Google, for example).
With stocks, the changes appeared to be in name only. All Google Inc shares will transfer into Alphabet Inc shares, including the number of shares. The names GOOGL and GOOG will remain the same in the company’s Nasdaq listing. After-hours market trading saw a rise in share prices upward of 5.1% following the announcement.
This may mark the beginning of a change in dynamic for one of the world’s largest tech companies. The restructuring could also mark an unofficial response to antitrust allegations by the European Union against Google over the last few years.
According to a report by Bloomberg.com, the changes will take place over the next few months.