Google has revealed a surprise shake-up that will see the search and software group slim down and operate under a new parent company called Alphabet.
While its eponymous search engine, along with the YouTube video website and Android operating system will remain under the Google brand, newer businesses – such as its research and investment arms – will work as separate parts of the new conglomerate.
Larry Page will be Alphabet’s chief executive, while his fellow co-founder Sergey Brin will be president of the umbrella company and former Android chief Sundar Pichai will replace Page as Google’s new chief executive.
Page said: “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.”
Explaining the choice of the parent company’s title, he added: “We liked the name Alphabet because it means a collection of letters that represent language, one of humanity’s most important innovations, and is the core of how we index with Google search. I should add that we are not intending for this to be a big consumer brand with related products – the whole point is that Alphabet companies should have independence and develop their own brands.
“Our company is operating well today, but we think we can make it cleaner and more accountable. Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related.”
Robin Richmond, managing director of Edinburgh-based digital marketing agency 8 Million Stories, said consumers were unlikely to see major changes under the shake-up, with popular products and apps such as YouTube, Gmail and Google Maps retaining their familiar look and names.
He added: “This change is more of a shuffle around for brands such as Nest [Google’s smoke alarm and thermostat business] or Fiber [its US broadband service]. These are likely to be rebranded in the future.
“There is certainly a strong case for the move providing more protection to the Google brand. Google have a long history of buying tech start-up companies, not all of which necessarily are complemented by being associated with Google. Take the acquisition of Nest for example, who specialise in thermostats. Being bought by a company who have been associated with data protection and sharing concerns in the past is not ideal for a business who want to install physical devices in consumers’ homes.”
Alphabet will also oversee Google Ventures and Google Capital, two investment entities that focus on early and growth-stage start-ups, and analysts said the group’s new structure could make it easier for Google to sell some of its unrelated businesses, or buy new ones.
Richmond added: “Google could see this as a way to ease the pain of regulatory issues, particularly in Europe, further down the line. It is easier to make the case to regulators that companies are separate entities if they only share an owner rather than being run as one huge super-brand.”