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Google Creates Alphabet, A New Umbrella Company For A “Slimmed-Down Google”

Sundar Pichai, now Google CEO, will focus on the core business, while Google X and other far-flung efforts get split off.

Google Creates Alphabet, A New Umbrella Company For A “Slimmed-Down Google”
[Photo: © ALBERT GEA/Reuters/Corbis]

In what is surely one of the most startling corporate blog posts ever published, Google CEO Larry Page has announced that the company is creating a new holding company, Alphabet, Inc. It will replace Google as the publicly traded overarching entity. Google, Inc. will be part of it, and will be run by Sundar Pichai, formerly Google’s product chief.

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The new Google, Page wrote, will be “slightly slimmed-down” and focus on the company’s core Internet services. More far-flung efforts, including the “moonshots” conducted by the Google X research arm and life-sciences efforts such as the anti-aging startup Calico, will be part of Alphabet.

“In general, our model is to have a strong CEO who runs each business, with [Google cofounder] Sergey [Brin] and me in service to them as needed,” Page wrote.

Alphabet, he continued, isn’t meant to be a consumer brand unto itself:

For Sergey and me this is a very exciting new chapter in the life of Google–the birth of Alphabet. 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! 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.

Though unexpected, the news is in sync with Page’s approach to his role as CEO, which has increasingly involved him encouraging audacious bets such as self-driving cars while handing off more responsibility to Pichai.

Google is often criticized for trying to do too many things as its core business, web advertising, has matured. With the creation of Alphabet, a wholly owned subsidiary called Google can devote full attention to the company’s key services, while Alphabet dreams big dreams that don’t have to fit a vision consistent with the Google brand.

About the author

Harry McCracken is the technology editor for Fast Company, based in San Francisco. In past lives, he was editor at large for Time magazine, founder and editor of Technologizer, and editor of PC World.

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