It’s been a few weeks since Google surprised the business community by announcing it will become part of a conglomerate called Alphabet, Inc. This now directs several companies, including Google, in a bid to focus long-term goals and broaden the major business ventures it is involved with.
On August 10, 2015, Google announced its plans to reorganise various interests into holding company Alphabet. Google itself isn't going anywhere—it will remain as the leading subsidiary and will be the umbrella company. On the same day Google announced its second quarter results and boasted revenues of $17.7 billion, a growth of 11% year over year. Clearly the search giant believes the time is now to launch bigger plans, and Alphabet brings with it the potential for self-driving cars, solar powered WiFi access, glucose-sensing contact lenses, and better quality search results. This is an overview of all the news so far.
Google's Statement
The news received widespread media coverage and led to the launch of a new website: abc.xyx. The company's CEOs were eager to lay out their plans to the world, with Larry Page writing: “As Sergey [Brin] and I wrote in the original founders' letter 11 years ago, ‘Google is not a conventional company. We do not intend to become one.’”
He went on to explain: "What is Alphabet? 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. 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."
The new ventures include technology businesses such as Nest, Google Fiber, Calico, and presumably Google's plans to bring free WiFi access to the world with solar powered drones known as the Solara 50 (one of which met with a mishap when it crashed in New Mexico in May 2015). There is also Project Loon. This utilizes weather balloons in the Earth's atmosphere to also bring WiFi to remote areas, although again the company struck problems in New Zealand last year when one went careering into the sea.
The widely accepted belief for the arrival of Alphabet, Inc., is it will allow Google's business objectives to be focused on these innovative projects. The individual business units, where each company can work on the task at hand, will create a more focused environment in which development can occur unhindered.
The Business World Reacts
Google enjoys almost $70 billion in annual revenue and a market capitalization of around $450 billion, giving the company a high level of power and influence. Google's various initiatives lead to disparate responses, with some businesses concerned they have too much control over their livelihoods. Google garners respect and criticism in large measures as a result, but the August announcement largely drew praise.
In general, the reaction from the mass media, industry thought leaders, and even on social media showed that the critical consensus was that the move is a brilliant idea. Bill George of CNBC stated “Google’s plan to reorganize … is as creative as the company itself.” Wired declared, “Google won the Internet” (a popular term online for someone or something doing exceptionally well).
Whilst the creation of Alphabet has been largely met with praise, there are doubters. Forbes ran with the headline: Why Google’s Alphabet Is A Risk Bet That Will End In Tears. In this Julian Birkinshaw, of London Business School, wrote, “I suspect that by creating Alphabet, Page and Brin are opening up a Pandora’s box of commentary and criticism that they could well do without. The only sustainable model for all Google’s really creative business ideas is a Private Equity model, or perhaps a foundation, where they can work on their 'moonshot' ventures away from the glare of the public capital markets."
The Business Implications
The dangers Google faces include a public sometimes unwilling to adapt and stocks which often drop, but since Alphabet is merely overseeing operations as a holding company rather than replacing Google, this may not be an issue.
From the perspective of SEO, such an integral part to the long-term business objectives of small and large businesses, there are no implications for search algorithms and SEO: Google will function as it normally does. In many ways it could assist the functioning of Google as the company will have an even clearer focus on its daily duties.
There is bad news for some, such as a small business Alphabet Signs in Pennsylvania. Alphabet Signs suffered a colossal drop in search traffic immediately after the announcement, which has forced the entire company to create an entirely new business strategy.
Beyond small business implications, BMW is currently investigating whether the search giant has infringed on trademark rights as the car manufacturer has a subsidiary of the same name. This is believed to be more of a consideration of the implications, as opposed to an outright plan for a lawsuit.
On a broad technological scope, Alphabet will be managing a series of companies which will be bringing innovative new ideas to the world. All of this whilst Google does it's thing for companies through its SERPs. Ultimately, the news has forced Google very firmly back into the limelight after a period of criticism following the failure of its social media effort Google+.
The news coverage has been something of a positive counterpoint to various negative stories which continue to rumble (most notably the ongoing privacy concerns of Internet users). Whether it’s one of their solar powered drones crashing to earth, lightning bolts hitting data centers and damaging data, or being ordered to remove search result links by the U.K. data protection watchdog, Google is always in the news, but the company hopes the creation of Alphabet will spell a a successful new era for the search engine behemoth.
