PHOTO COURTESY OF WIKIMEDIA COMMONS / Google Alphabet will absorb all the current Google ventures. This will allow Alphabet to streamline the management of all the new companies in order to improve efficency. It also offers Google a chance to rebrand themselves.
As of Oct. 2, Google ceased to exist, at least in the way they used to. On Oct. 2, Google created and went under a new umbrella company called Alphabet. Going under Alphabet allows Google to do so much more than it ever could when it was simply Google.
So what exactly is Alphabet? When I asked Nick Capobianco, a first-year student in the physical therapy program what he knew about Alphabet, he replied, “The letters we use to make words?” Alphabet is a company created by Google to become the parent and umbrella company to all the former departments. The name itself signifies what everyone has always thought of Google; it is everything from A-Z. The structure it created made all former branches of Google into independent companies. Alphabet has seven separate companies that it oversees. These include Calico, Google’s research company to fight age-related diseases and aging; Nest, its line of products to make your home into a “smart home;” Google Ventures, its investment team for up-and-coming companies; Google X, which includes its robotics team and general scientific breakthroughs; Fiber, its internet provider; Google Capital, its other investment team for long-term investments, and finally Google, which contains Android, Search, YouTube, Apps, Maps and Ads. These companies were once all parts of Google and overseen by one CEO, Larry Page, but now all of these individual companies have their own CEOs to run them. This structure allows each company to grow independently of the others while still keeping ties both financially and influentially to Alphabet and ultimately to the original Google. Jinghan Cai, Ph.D., a professor of economics and finance and a specialist in behavioral finance says that the goal is profitability. “This will allow the smaller firms to get the attention they need to grow and make money. The best part about small firms is growth,” said Cai. He also suggested that this structure will offer incentives to the individual CEOs to work hard and grow their business instead of just working in a branch like before.
With this new structure, Google has the ability to increase profitability greatly because of three main characteristics it now possesses. First off, Google can now focus more intently on what matters to it, like growing its stock and upping its dividends. Secondly, the new structure will help Google avoid neglecting its smaller companies. Under Google, they were such small branches of a gigantic company where neglect can happen easily. But through this change, these companies are independent and therefore have the ability to shine in the market independently. Lastly, this structure will allow each company to pull in talent personally instead of having talent passed down. The individual companies can recruit their own workers that they see potential and have interest in. Nik Yaskow, a first-year computer science major, said that this structure gives him hope. “The fact that they’re all separate now might make getting a job in one of the companies easier,” said yaskow.
So with all these changes going down, how will it affect Google’s status in the market? Well, Alphabet still trades under the tickers GOOG and GOOGL. Professor Cai says that they most likely did not change the ticker because, “The ticker is notable and fancy enough.” And since Alphabet contains all things that Google contained, nothing has really changed, from the market’s view. Or has it? By looking at Alphabet’s stock, one can see that since the day Google went under Alphabet, the stock has grown in value greatly. This is based on people getting excited because of this flashy new name and structure even though no further financial growth was projected.