Alphabet Inc.

Alphabet Inc. is an American multinational conglomerate headquartered in Mountain View, California. It was created through a restructuring of Google on October 2, 2015,[2] and became the parent company of Google and several former Google subsidiaries.[3][4][5] The two founders of Google assumed executive roles in the new company, with Larry Page serving as CEO and Sergey Brin as president.[6] Alphabet is the world's fourth-largest technology company by revenue and one of the world's most valuable companies.[7][8]

"GOOGL" redirects here. For the company formerly traded under the ticker symbol, see Google.

Alphabet Inc.
Type
Public
Traded as
  • Class A: NASDAQ: GOOGL
  • Class B: Unlisted
  • Class C: NASDAQ: GOOG
  • NASDAQ-100 components (A & C)
  • S&P 100 components (A & C)
  • S&P 500 components (A & C)
ISINUS02079K3059
US02079K1079
IndustryConglomerate
FoundedOctober 2, 2015 (2015-10-02)
Founders
HeadquartersGoogleplex,
Mountain View, California
,
US
Area served
Worldwide
Key people
ProductsTechnology
Revenue
  • US$161.857 billion (2019)
  • US$136.819 billion (2018)
US$34.23 billion (2019)
US$34.34 billion (2019)
Total assets US$275.9 billion (2019)
Total equity US$201.4 billion (2019)
Number of employees
 118,899 (2019)
Subsidiaries
Websiteabc.xyz
Footnotes / references
[1]

The establishment of Alphabet was prompted by a desire to make the core Google business "cleaner and more accountable" while allowing greater autonomy to group companies that operate in businesses other than Internet services.[4][9] Page and Brin announced their resignation from their executive posts in December 2019, with the CEO role to be filled by Sundar Pichai, also the CEO of Google. Page and Brin remain co-founders, employees, board members, and controlling shareholders of Alphabet Inc.[10]

History

On August 10, 2015, Google Inc. announced plans to create a new public holding company, Alphabet Inc. Google CEO Larry Page made this announcement in a blog post on Google's official blog.[11] Alphabet would be created to restructure Google by moving subsidiaries from Google to Alphabet, narrowing Google's scope. The company would consist of Google as well as other businesses including X Development, Calico, Nest, Verily, Fiber, Makani, CapitalG, and GV.[6][12][13] Sundar Pichai, Product Chief, became the new CEO of Google, replacing Larry Page, who transitioned to the role of running Alphabet, along with Google co-founder Sergey Brin.[14][15]

In his announcement, Page described the planned holding company as follows:[4][16]

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.

Page says the motivation behind the reorganization is to make Google "cleaner and more accountable and better". He also said he wanted to improve "the transparency and oversight of what we're doing", and to allow greater control of unrelated companies.[4][9]

Former executive Eric Schmidt (now Technical Advisor) revealed in the conference in 2017 the inspiration for this structure came from Warren Buffett and his management structure of Berkshire Hathaway a decade ago.[17] Schmidt said it was he who encouraged Page and Brin to meet with Buffett in Omaha to see how Berkshire Hathaway was a holding company made of subsidiaries with strong CEOs who were trusted to run their businesses.[17]

Before it became a subsidiary of Alphabet, Google Inc. was first structured as the owner of Alphabet. The roles were reversed after a placeholder subsidiary was created for the ownership of Alphabet, at which point the newly formed subsidiary was merged with Google. Google's stock was then converted to Alphabet's stock. Under the Delaware General Corporation Law (where Alphabet is incorporated), a holding company reorganization such as this can be done without a vote of shareholders, as this reorganization was.[18] The restructuring process was completed on October 2, 2015.[2] Alphabet retains Google Inc.'s stock price history and continues to trade under Google Inc.'s former ticker symbols "GOOG" and "GOOGL"; both classes of stock are components of major stock market indices such as the S&P 500 and NASDAQ-100.[19]

On December 3, 2019, Page and Brin jointly announced that they would step down from their respective roles, remaining as employees and still the majority vote on the board of directors. Sundar Pichai, the CEO of Google, is to assume the CEO role at Alphabet while retaining the same at Google.[20]

Structure

Alphabet's largest subsidiary is Google. Its other subsidiaries include Calico, DeepMind, GV, CapitalG, X, Google Fiber, Makani, Sidewalk Labs, Verily, Waymo, Wing and Loon.[21][22][23] As of September 1, 2017, their equity is held by a subsidiary known as XXVI Holdings, Inc. (referring to the Roman numeral of 26, the number of letters in the alphabet), so that they can be valued and legally separated from Google. At the same time, it was announced that Google will be reorganized as a limited liability company, Google LLC.[24][25]

Eric Schmidt said at an Internet Association event in 2015 that there may eventually be more than 26 Alphabet subsidiaries. He also said that he was currently meeting with the CEOs of the current and proposed Alphabet subsidiaries. He said, "You'll see a lot coming."[26]

While many companies or divisions formerly a part of Google became subsidiaries of Alphabet, Google remains the umbrella company for Alphabet's Internet-related businesses. These include widely used products and services long associated with Google, such as the Android mobile operating system, YouTube, and Google Search, which remain direct components of Google.[6][27]

Former subsidiaries include Nest Labs, which was merged into Google in February 2018[28] and Chronicle which was merged with Google Cloud in June 2019.[29]

Corporate identity

Page explained the origin of the company's name:[16]

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! We also like that it means alpha‑bet (Alpha is investment return above benchmark), which we strive for!

In a 2018 talk, Schmidt disclosed that the original inspiration for the name came from the location of the then Google Hamburg office's street address: ABC-Straße.[30]

Alphabet has chosen the domain abc.xyz with the .xyz top-level domain (TLD), which was introduced in 2014. It does not own the domain alphabet.com, which is owned by a fleet management division of BMW. BMW has said that it is "necessary to examine the legal trademark implications" of the proposals. Additionally, it does not own the domain abc.com, which is the promoted domain of the Disney-owned American Broadcasting Company (abc.com redirects to a subdomain of go.com, through which most of Disney's sites are hosted).[31][32]

The website features an Easter egg in the paragraph where Larry Page writes, "Sergey and I are seriously in the business of starting new things. Alphabet will also include our X lab, which incubates new efforts like Wing, our drone delivery effort. We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure." The period after "drone delivery effort" is a hyperlink to "hooli.xyz",[33] a reference to the television series Silicon Valley.[34]

Revenue

As per its 2017 annual report, 86% of Alphabet's revenues came from performance advertising (through user clicks using Adsense and Google Ads) and brand advertising.[35] Of these, 53% came from its international operations. This translated to a total revenue of US$110,855 million in 2017 and a net income of US$12,662 million.

On February 1, 2016, Alphabet Inc. surpassed Apple to become the world's most valuable publicly traded company until February 3, 2016, when Apple surged back over Alphabet to retake the position. Experts cited Apple's lack of innovation as well as increasing Chinese competition as reasons for the poor performance.[36][37]

As of 2019, Alphabet is ranked No. 15 on the Fortune 500 rankings of the largest United States corporations by total revenue.[38]

On January 16, 2020, Alphabet became the fourth US company to reach a $1 trillion market value[39] entering the Trillion dollar companies club for the first time.

Investments and acquisitions

Investments

In November 2017, Alphabet Inc. led a Series A round of $71 million along with Andreessen Horowitz and 20th Century Fox in music startup UnitedMasters, founded by Steve Stoute.[40]

Acquisitions
Main article: List of mergers and acquisitions by Alphabet

An analysis of the company's investments in 2017 suggested that it was the most active investor in that period, outdoing the capital arm of Intel and also its own best customer. Alphabet, Inc. acquired seven of its own capital-backed startups in the 2017 financial year, with Cisco second having acquired six of the company's previous investments.[41]

Flatiron Health, a startup founded by two former Google employees and backed by Alphabet, Inc., announced that it was to be acquired by health conglomerate Hoffmann-La Roche for $1.8 billion. The company provides electronic medical records and analysis to identify improved treatments for oncology patients.[42]

Lawsuit

Alphabet Inc. sued Uber over technology similar to Alphabet's proprietary self-driving car technology. Alphabet's autonomous vehicle technology has been under development for a decade by Alphabet's Waymo (self-driving vehicle division). The proprietary technology is related to 14,000 documents believed to have been downloaded and stolen by a former Waymo engineer, subsequently employed by Uber.[43][44] The lawsuit was settled in February 2018, with Uber agreeing not to use the self-driving technology in dispute and also agreed to provide Waymo with an equity stake of 0.34%, equating to around $245 million at the firm's early 2018 value.[45]

See also
  • Internet portal

References
  1. "Alphabet Announces Fourth Quarter and Fiscal Year 2019 Results" (PDF). abc.xyz. Alphabet Inc. February 3, 2020. Retrieved March 2, 2020.
  2. "SEC Filing (Form 8-K) by Alphabet Inc". U.S. Securities and Exchange Commission. October 2, 2015.
  3. "Google to be part of new holding company, 'Alphabet'". Retrieved August 11, 2015.
  4. Page, Larry. "G is for Google". Google Official Blog. Retrieved August 11, 2015.
  5. "Google creates new parent company called Alphabet". CNET. August 10, 2015. Archived from the original on September 17, 2015. Retrieved September 19, 2015.
  6. Womack, Brian (August 10, 2015). "Google Creates New Company Called Alphabet, Restructures Stock". Bloomberg. Retrieved August 10, 2015.
  7. "Top 50 Global Technology Companies". Fortune Global 500. Archived from the original on January 26, 2017. Retrieved June 4, 2019.
  8. "Alphabet". Forbes. Retrieved June 6, 2011.
  9. Metz, Cade (August 10, 2015). "A New Company Called Alphabet Now Owns Google". Wired. Retrieved August 13, 2015.
  10. Donfro, Jillian (December 3, 2019). "Larry Page Steps Down As CEO Of Alphabet". Forbes. Retrieved December 3, 2019.
  11. Kelly, Heather (August 10, 2015). "Meet Google Alphabet – Google's new parent company". CNNMoney. Retrieved May 1, 2019.
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  21. "Google's Loon brings internet-by-balloon to Kenya – BBC News". web.archive.org. July 19, 2018. Retrieved May 1, 2019.
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  33. "hooli".
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  35. Annual report 2017. Alphabet investor relations. March 2, 2018. pp. 2, 3, 5, 6. Retrieved December 3, 2018.
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  40. Constine, Josh. "With $70M from Alphabet, UnitedMasters replaces record labels". TechCrunch. Retrieved December 4, 2017.
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