Alphabet Inc. is a global technological holding corporation located in Mountain View, California. On October 2, 2015, it was formed as a result of a Google reorganisation and became the parent company of Google and numerous previous Google subsidiaries. The two Google co-founders remained Alphabet’s controlling shareholders, board members, and executives. Alphabet is the world’s third-largest technology firm in terms of revenue and one of the most valuable corporations. Along with Amazon, Apple, Meta, and Microsoft, it is one of the Big Five American information technology corporations.
The formation of Alphabet Inc. was motivated by a goal to make Google’s core business “cleaner and more efficient,” while also granting greater autonomy to group firms that operate in industries other than Internet services. Founders Larry Page and Sergey Brin announced their departure from their leadership positions in December 2019, with Sundar Pichai, currently the CEO of Google, taking over as CEO. Page and Brin remain Alphabet Inc. co-founders, employees, board members, and controlling shareholders.
History of Alphabet, Inc. – Why did it Google became Alphabet?
On August 10, 2015, Google Inc. announced plans to form Alphabet Inc., a new public holding company. This news was made by Google CEO Larry Page in a blog post on Google’s official blog. Alphabet would be formed in order to reorganise Google by transferring companies from Google to Alphabet, so restricting Google’s scope. Google would be joined by additional companies such as X Development, Calico, Nest, Verily, Fiber, Makani, CapitalG, and GV. Sundar Pichai, Google’s Product Chief, took over as CEO, succeeding Larry Page, who transferred to the job of overseeing Alphabet with Google co-founder Sergey Brin.
In his announcement, Page described the planned holding company as follows:
Alphabet is mostly a collection of companies. The largest of which, of course, is Google. 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. … Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related.
The goal for the change, according to Page, is to make Google “cleaner, more responsible, and better.” He also stated that he wants to increase “transparency and scrutiny of what we’re doing,” as well as give himself more authority over adjacent enterprises.
Former executive Eric Schmidt (currently Technical Advisor) acknowledged at a conference in 2017 that the concept for this structure originated from Warren Buffett and his Berkshire Hathaway management structure a decade earlier. Schmidt stated that it was he who urged Page and Brin to meet with Buffett in Omaha to observe how Berkshire Hathaway was a holding company comprised of subsidiaries led by competent CEOs who were trusted to operate their respective companies.
Also Read: Microsoft – History of World’s Most Successful Technology Company
Google Inc. was originally constituted as Alphabet’s owner before becoming a subsidiary of Alphabet. The roles were reversed after a placeholder subsidiary was formed for Alphabet’s ownership, and the newly formed subsidiary was merged with Google. The stock of Google was then transformed to Alphabet’s shares. A holding company restructuring such as this can be done without a shareholder vote under Delaware General Corporation Law (where Alphabet is formed). On October 2, 2015, the reorganisation process was finished. Alphabet keeps Google Inc.’s stock price history and trades under the old ticker symbols “GOOG” and “GOOGL” of Google Inc.
On December 3, 2019, Page and Brin stated that they would step down from their respective jobs, but would continue to work for Google and had the majority vote on the board of directors. Sundar Pichai, the CEO of Google, will take over as CEO of Alphabet while continuing to lead Google.
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