Google’s reinvention as tech holding company Alphabet, announced in August, legally took place on 2 October, with the company telling the Financial Times that the legal formalit will have no immediate outward effects.
When the stock market opens on 5 October, the old Google will have been replaced by the new Alphabet, though its two classes of publicly traded shares will continue under their old ticker symbols, GOOG and GOOGL.
The company said that, now the new legal form was in place, it would start to carve out its different divisions into wholly owned subsidiaries, including the Google internet business, the source of almost all its income. These include “smart city” venture Sidewalk Labs; “smart home” company Nest; biotech arm Calico; and Google Life Sciences. Google Ventures, Google Capital and the Google X research labs will also become subsidiaries.
The corporate reinvention will be accompanied by a small degree of extra financial transparency. Google has said that from January it will report results under two business segments, one representing its internet business and the other containing all its other operations.
The Alphabet switch is part of an attempt by co-founder and chief executive Larry Page to transcend what he believes are inevitable limits on growth that hold back normal companies. Page earlier expressed frustration with the way all big companies hit a ceiling: “The biggest companies are all within an order of magnitude of the same size, certainly in market cap,” he said.
Page put the limitation down to the corporate arrangements that led to so many decisions ending up on the chief executive’s desk, creating a bottleneck that prevents them taking on as many new ideas as they would like. “It’s limited a lot of companies and maybe why they get to a certain size and maybe not get much bigger,” he said. The Alphabet arrangement is intended to overcome this hurdle, and enable Google to keep growing indefinitely, potentially making it the first trillion-dollar company, by handing most of the decisions to the heads of semi-autonomous business units.
