Google Announces the Formation of its Parent Company

On Monday, Google announced its corporate restructuring and the formation of Alphabet, the parent company of Google. The umbrella company will have Larry Page as CEO and Sergey Brin as its president. Brin and Page are the co-founders of Google, which was established in 1998.

Core business management

Alphabet will be composed of all the core businesses of Google, which include maps, Internet search, YouTube, apps, ads and Android together with the new businesses, Fiber, Nest, Google Ventures, Google Capital, Google X and Calico. According to Larry Page, each business will be managed by its own CEO.

The new structure according to Page will make their operation more accountable and clear-cut. The restructuring announcement caused Google shares to jump five percent.

Under the new setup, Google will have Sundar Pichai, who is the Senior Vice President of Product, as its new CEO. He had been with Google since 2004. The other businesses will still be led by their current leaders. Calico is headed by Arthur Levinson, Dan Doctoroff handles Sidewalk Labs and Tony Fadell is the head of Nest. Susan Wojcicki, who is the CEO of YouTube will be reporting to the new Google CEO, Sundar Pichai.
Alphabet’s executive chairman will be Eric Schmidt while Brin will remain as top man of Google X, aside from being Alphabet’s president.

More freedom to experiment

Larry Page said that the new structure will allow the companies under Alphabet to become more independent, take risks and develop their brands. They will be free to invest in new projects without encountering interference from other company divisions or investors looking over their shoulders, worried that they are wasting energy and time on various projects.

Increase in sales

Google’s sales during the last quarter was $17.7 billion, about 90 percent of which was contributed by advertising sales through Android, YouTube, its partner websites and Internet search. The company is very liquid, with $61 billion in cash and a last quarter profit of $4.3 billion. This year, investors have raised the stock of Google by 25 percent.

On the reverse, there had been concerns that the dominance of Google in its sector had reached its peak. While it had maintained leadership in Internet search and had been benefiting from web advertising, analysts said that its shares showed that the company is struggling after reaching an all-time high in 2014. Google’s other ventures, such as Google+ social network, home automation, Google TV mobile payments, health care, Internet balloons, Google Glass and self-driving cars have yet to show further developments and improvements.

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