Technology giant will restructure its operations separating off YouTube and its search engine from its research divisions By Telegraph............
Google has announced a massive corporate overhaul that will see the internet giant separate its core business from its ambitious research divisions and owned by a new company, Alphabet.
Chief executive Larry Page, who co-founded Google as a university research project two decades ago, announced the creation of Alphabet, a holding company of which Google would be one subsidiary, on Monday night.
The restructuring will see the company’s founders, Mr Page and Sergey Brin, step back from the day-to-day running of Google, with highly-respected executive Sundar Pichai taking over the core business and Mr Page becoming chief executive of Alphabet.
Google CEO Larry Page will head up Alphabet Photo: Getty Images
Many of Google’s non-core operations, such as its life sciences division, secretive Google X research department, and Google Ventures investment arm, will be separated from the central business, which includes the Google search engine, YouTube and Android smartphone software and will retain the “Google” name.
Nest, the internet appliance company bought by Google last year, and Google Fiber, a high-speed broadband project, will also be separated, with all of the separate units owned by Alphabet.
Google’s shares rose by more than 6pc in after-hours trading following the announcement. Shareholders in Google will now become shareholders in Alphabet, which will continue to be listed in New York on Nasdaq.
Mr Page will become Alphabet’s chief executive, and Mr Brin president. Mr Pichai, Google’s product chief who was seen as Mr Page’s effective number two, will take over Google itself.
Sundar Pichai will become new Google CEO Photo: REUTERS
The company’s two founders created Google while at Stanford University in California in the 1990s, and have retained control of the company through its history, growing it into the internet’s biggest search engine and one of the world’s most valuable companies. Android dominates the smartphone market and YouTube is the world’s biggest video website.
However, Mr Page and Mr Brin have also expressed loftier ambitions, investing heavily in medical science, space exploration and robotics. In a statement last night, Mr Page said separating these areas from Google’s core business, which is driven largely by online advertising revenues, would allow such projects to have more independence.
The move will leave the day-to-day running of Google to Mr Pichai, with Mr Page adopting a more hands-off approach.
“As Sergey and I wrote in the original founders letter 11 years ago, ‘Google is not a conventional company. We do not intend to become one.’” Mr Page said.
“As part of that, we also said that you could expect us to make ‘smaller bets in areas that might seem very speculative or even strange when compared to our current businesses.’
“From the start, we’ve always strived to do more, and to do important and meaningful things with the resources we have.”
Investors in Google have asked questions about the company’s heavy spending on research and development in recent years. Mr Page said the restructuring will make Alphabet “cleaner and more accountable.”
Analysts welcomed the company's efforts to be more clear about where its money is coming from and where it is investing, although some suggested it would mean more money being spent on research projects, hitting profits.
Commentators speculated that separating Google's core business from its less-proven projects may make it easier for the new Google to issue debt, possibly allowing it to buy back shares from investors.
Others suggested that Mr Pichai had been approached by Twitter, which is looking for a chief executive, and that he was promoted in order to keep him on board.
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