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article imageGoogle announces massive restructuring, 'Alphabet' parent company

By James Walker     Aug 11, 2015 in Internet
Google has surprised the world by announcing a large-scale restructuring of its entire business that will result in the formation of a new holding company, Alphabet, to contain the search giant itself and the various other companies it has acquired.
The birth of Alphabet was announced by Google co-founders Larry Page and Sergey Brin in a blog post yesterday titled "G is for Google." The two will be CEO and President of Alphabet respectively while Sundar Pichai will step up to the role of CEO of Google.
The Alphabet name was chosen "because it means a collection of letters that represent language ... the core of how we index with Google search." The company's website will reside at the distinctive address of http://www.abc.xyz.
The creation of Alphabet is not likely to mean much for the average Google user. Google will continue to operate as it currently does and most of Google's apps and services such as Search, Android, YouTube, Chrome and Maps will remain under its control.
Alphabet will be a "collection of companies" that generally fall outside Google's main sphere of interest. It will be a holding ground for other companies acquired by Google, enabling the company that is known the world over for its Internet presence to work on other technologies without impeding development in its core fields.
Companies that will move to direct control of Alphabet — essentially in equal rank to Google — will include Google Fiber, Google Capital and Google X, as well as recent acquisitions such as Nest, Calico and Life Sciences.
Page explains the new model will allow more management scale by letting the company engage in new activities that aren't related to each other. He writes: "Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey [Brin] and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We'll also make sure we have a great CEO for each business, and we’ll determine their compensation."
Alphabet will be replacing Google as the publicly traded company on the stock market. Google Inc. shares will automatically convert into the same number of Alphabet Inc. shares and shareholders will have the same rights as before.
The company will continue to use the Nasdaq ticker symbols of GOOGL and GOOG. Google shares soared 5 percent in after hours trading yesterday as the news of the restructuring broke.
Page writes that the move is a "very exciting new chapter in the life of Google." With the search giant now part of a large, general holding company, its co-founders are confident that Alphabet will bring "tremendous focus" to the "extraordinary opportunities" already offered by Google.
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