Google made a huge surprise announcement on Monday night that calls for a complete corporate restructuring. The move will separate the core business of Google from its research divisions, splitting up the company into a conglomerate of businesses all owned by a new parent company, Alphabet .
What Does that Mean?
It means that Google is no longer the sole parent company of its wide range of different businesses, including Google X , Nest Labs , and Calico . Instead, Google will be separating itself from these research groups, while retaining its core business— Youtube , Gmail , Google Play for Android , and of course, Search .
This new conglomerate will be owned by Alphabet—a new parent company that will own both Google’s core business, and its sister-research companies. Alphabet will be owned by Larry Page , the co-founder and CEO of Google, while the new core business of Google will be run by Page’s second-in-command, Sundar Pichai .
But Why?
Because Google has grown to be so much more than just a search engine, since its creation in 1997. Since it first appeared on the internet, Larry Page and Sergey Brin—both co-founders of the original Google—have tried to diversify the company’s goals as much as possible, creating research divisions to work on projects ranging from creating simple household appliances , to computerized glasses , to self-driving cars .
Now that Google has become so much more than the internet services that we usually think of when we hear its name, Brin and Page want to focus more on diversifying the company by giving its research groups more attention. By breaking Google apart into a bunch of different businesses, all owned by the parent company Alphabet, Brin and Page claim they will be able to spend more time on these research projects—projects on the cutting edge of science, with the potential to change the world, and bring in higher profits.
Will Anything Change?
Yes—but most likely nothing that you would notice. After all, the Google that we know and love is staying exactly the same as it used to be, including all Google-owned websites and services. The only things that are likely to change are the names of Google’s research divisions, as they are no longer required to carry the “Google” name, but instead owned by Alphabet.
Aside from these skin-deep changes, investors will be happy to learn that Alphabet’s ownership of Google’s former research companies will make it much easier to track each individual division’s quarterly progress. This is a big step forward for investors, who are applauding the increased corporate transparency.
