In a post to the company’s blog, former Google CEO turned Alphabet CEO Larry Page announced the name change and restructuring as a vehicle for streamlining operations and driving accountability.
“Alphabet is mostly a collection of companies,” Page wrote. Alphabet is a holding company that contains Google. Google oversees the Internet business and search, maps, YouTube and Android. Alphabet covers ventures like Google X, Google Fiber, Google Ventures, Life Sciences and Calico, which researches the science of aging.
As noted, Page, who co-founded Google with Sergey Brin, will become Alphabet CEO. Brin will be president of Alphabet and Ruth Porat will be CFO of the holding company. Sundar Pichai, formerly Google product chief will become CEO of Google.
Page called Pichai “a key part of this” in the blog post. “He has really stepped up since October of last year, when he took on product and engineering responsibility for our Internet businesses. Sergey and I have been super excited about his progress and dedication to the company. And it is clear to us and our board that it is time for Sundar to be CEO of Google.”
Alphabet will replace Google as the publicly traded financial entity with a one-to-one stock conversion and the same rights attached.
Here’s the operative portion of Page’s blog post: “This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity). 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. In general, our model is to have a strong CEO who runs each business, with Sergey 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. In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.”