It’s Silicon Valley’s version of Alphabet Soup.
Tech giant Google on Monday announced plans for a new operating structure, including a new umbrella company called "Alphabet" which will include – among other things – Google.
Google will become a subsidiary of Alphabet under the new structure.
The big headlines from this, at least right away, are that Google has a new CEO: Longtime executive Sundar Pichai. Alphabet itself will be run by Google founders Larry Page and Sergey Brin. For investors, Google stock will convert to Alphabet stock.
Google CEO Larry Page announced the decision in a blog post: "Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. Google will become a wholly-owned subsidiary of Alphabet. Our two classes of shares will continue to trade on Nasdaq as GOOGL and GOOG." (Google SEC Filing)
At first blush, this doesn’t seem like it will affect most Google users. Users will still be able to search, use docs, and all that – but their investment is already changing, for the better. Google shares (for right now, at least, listed as GOOG) are moving sharply higher in after-hours trading, likely because Google itself will be a leaner company, focusing on what makes it the most money.
Page said both he and Sergey Brin were excited about this new chapter in the life of Google: "The birth of Alphabet."
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"We liked the name Alphabet because it means a collection of letters that represent language, one of humanity's most important innovations, and is the core of how we index with Google search!" Page wrote. "We also like that it means alpha-bet (Alpha is investment return above benchmark), which we strive for! I should add that we are not intending for this to be a big consumer brand with related products--the whole point is that Alphabet companies should have independence and develop their own brands."
Alphabet will also include Google's X lab, which is an incubator for new efforts such as Wing, Google's drone delivery service. Page said he and Brin were "also stoked" about growing Google's investment arms, Ventures and Capital, as part of this new structure.