Google just made a huge change today. Cofounders Larry Page and Sergey Brin announced a massive restructuring of the 11-year-old internet giant: Google is now a subsidiary under a larger, new company called Alphabet.
Alphabet will encompass Google and a number of other (smaller) current endeavors, such as health-related projects Life Sciences and Calico, experimental project wing X Lab, and early-stage funding organizations Ventures and Capital. Page will head up Alphabet as CEO, Brin will act as president, and Sundar Pichai, formerly Google's product chief, is now CEO of Google.
Why the sudden change? Page explains on Google's official blog:
AdvertisementADVERTISEMENT
Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. Alphabet is about businesses prospering through strong leaders and independence.
Basically, Google is ginormous, and its leaders realize that. Rather than having all of these disparate working groups reporting to VPs at Google, they are now individually run and individually financed, but still a part of the same family: the Alphabet family (aw). Alphabet's leaders hope that this restructuring will result in several positives, allowing the company to get more ambitious things done, focus on long-term goals and projects, and help great entrepreneurs and companies succeed. The company also anticipates improved transparency and being able to invest appropriate resources for the scale of the companies it oversees — all while improving as many lives as it can.
Google chose the name Alphabet for a few reasons. First, the word's definition is a "collection of letters that represent language, one of humanity's most important innovations" (and what the company uses to index the web with Google Search). Second, the name can be broken apart into "alpha" and "bet," with the former meaning an investment return that's above benchmark.
For those with current stock in Google, things won't change much. Alphabet Inc. replaces Google as the publicly traded name, and all Google shares just become Alphabet shares. Perhaps confusingly, Google will also get its own trading ticker: Alphabet will trade under GOOGL and Google will trade under GOOG.
Until now, "Alphabet" hasn't been a very popular term on Google Search. We suspect this chart is going to look very different tomorrow.