Google cofounders Sergey Brin and Larry Page are leaving the company to start their latest venture, Alphabet.
Alphabet is a collection of companies, the largest of which is Google. The new operating structure will give the pair of entrepreneurs more scope to independently manage numerous varied and unrelated projects in a way that is cleaner and more accountable.
According to Larry Page, ‘Alphabet is about businesses prospering through strong leaders and independence.’ The business model is to allocate a strong CEO to each business with Sergey and Larry offering support, handling capital allocation and overseeing the execution of each business.
Through Alphabet, the CEO’s will be able to pursue new ventures such as Wing, a drone delivery effort as part of Google X, the Life Sciences division of Alphabet. Potential life-changing research from this company includes contact lenses that can measure blood glucose levels, synthetic skin that can detect cancer early on, a self-driving car, and Google Glass.
Alphabet is not a consumer brand pushing products, but a company that hopes to empower great entrepreneurs and businesses to independently develop themselves.
Google will become a wholly-owned subsidiary of Alphabet Inc. and all Google shares will automatically convert into Alphabet shares.
Sundar Pichai will be taking over Google as CEO, and Page says ‘I feel very fortunate to have someone as talented as he is… and I know Sundar will always be focused on innovation - continuing to stretch boundaries'. Services under Google’s branding such as YouTube, Gmail, Maps, search and ads will be functionally no different from how they are now, meaning brands who advertise using Google products can expect the company to continue organising the world’s information in new and innovative ways.
What key trusted sources are saying:
“Giving all these companies an independent focus could transform the way we live and work, turning the world into a safer and better place.” Anna Francis, Econsultancy.
"Google has got a lot of flack in the advertising business for being so dominant in search and related services… It makes sense to carve out its advertising business. So now its future services – be it ‘Driverless Cars Inc.’, etc. – won’t necessarily be affected by Google Inc. That’s an intelligent reaction to the way governments regulate, both today, and for tomorrow." Gareth Davies, Adbrain.
"It remains to be seen how the new divisions will play out in practice, but the intention seems to be a renewed focus on both Google's current products and the moonshots that aim to replace those products as Alphabet's focus in the decades to come." Russel Brandom, The Verge.
“As a practical matter the new organization will have little or no impact whatsoever on search marketers or search marketing.” Greg Sterling, Search Engine Land.