The establishment of Alphabet Inc. 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.[6][8] Founders Larry Page and Sergey Brin announced their resignation from their executive posts in December 2019, with the CEO role to be filled by Sundar Pichai, who is also the CEO of Google. Page and Brin remain employees, board members, and controlling shareholders of Alphabet Inc.[9]
History
On August 10, 2015, Google announced plans to create a new public holding company, Alphabet Inc. Google co-founder and CEO Larry Page made this announcement in a blog post on Google's official blog.[10] Alphabet was created to restructure Google by moving subsidiaries from Google to Alphabet, thus narrowing Google's scope. The new holding company would consist of Google as well as other businesses including X Development, Calico, Nest, Verily, Fiber, CapitalG, and GV.[11][12][13]Sundar Pichai, the company's Product Chief, became the new chief executive officer of Google, replacing Page, who transitioned to the role of running Alphabet, along with co-founder Sergey Brin.[14][15]
In his announcement, Page stated that the planned holding company would allow for "more management scale, as we can run things independently that aren't very related" to Google. He clarified that, as a result of the new holding company, Google would be "a bit slimmed down, with the companies that are pretty far afield of our main internet products contained in Alphabet instead".[16] He further stated that the motivation behind the reorganization is to make Google "cleaner and more accountable and better" and that he wanted to improve "the transparency and oversight of what we're doing".[6][8]
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 he 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.[18] 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.[19] The restructuring process was completed on October 2, 2015.[4] 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.[20]
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, assumed the CEO role at Alphabet while retaining the same at Google.[21]
On January 20, 2023, Pichai wrote a letter to all employees announcing that the company would be laying off about 12,000 jobs, or 6% of its global workforce. In the letter, Pichai wrote, "Over the past two years we've seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today."[23]
In January 2024, Waymo, the autonomous driving division of Alphabet Inc., which operates extensively in San Francisco, filed an application with the California Public Utilities Commission to expand service in Los Angeles. Such a license would allow the company to make full use of its fleet in the city instead of test drives by invitation.[24]
In August 2024, following the lawsuit filed by the United States Department of Justice in 2020, a United States district court has found Alphabet guilty of violating antitrust law. This marked the first antitrust ruling against a U.S. company in 24 years. Alphabet has appealed the ruling.[25]
Structure
Alphabet Inc. is the parent of a diverse set of subsidiaries:[26][27][28]
As of September1,2017[update], 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 would be reorganized as a limited liability company, Google LLC.[31][32]
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."[33]
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 operating system, YouTube, and Google Search, which remain direct components of Google.[11][34]
Former subsidiaries include Nest Labs, which was merged into Google in February 2018[35] and Chronicle Security which was merged with Google Cloud in June 2019.[36]Sidewalk Labs was absorbed into Google in 2021 following CEO Daniel L. Doctoroff's departure from the company due to a suspected ALS diagnosis.[37]
In January 2021, Loon LLC CEO Alastair Westgarth mentioned in a blog post[38] that the company would be shutting down, citing lack of a scalable and sustainable business model. In July 2021, Alphabet announced Intrinsic, a new robotics software company spun out of X.[39] In November 2021, Alphabet announced a new company named Isomorphic Labs, using artificial intelligence for drug discovery and headed by DeepMind CEO Demis Hassabis.[40]
Ownership
Alphabet is mainly owned by institutional investors, who own over 60% of shares. The founders Larry Page and Sergey Brin are each controlling around 3% of all shares, but are controlling with other insiders the majority of voting shares. The largest shareholders in December 2023 were:[41]
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.[45]
Alphabet has chosen the domain abc.xyz with the .xyztop-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. Following the announcement, BMW said it would be "necessary to examine the legal trademark implications" of the proposals. Additionally, it does not own the domain abc.com, which is the domain of the Disney-owned American Broadcasting Company.[46][47]
Google's mission statement, from the outset, was "to organize the world's information and make it universally accessible and useful",[48] and its unofficial slogan is "Don't be evil".[49] In October 2015, a related motto was adopted in the Alphabet corporate code of conduct by the phrase: "Do the right thing".[50] The original motto was retained in the code of conduct of Google, now a subsidiary of Alphabet.[51]
Finances
The key trends of Alphabet Inc. are (as at the financial year ending December 31):[52]
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.[60] Of these, 53% came from its international operations. This translated to a total revenue of US$110,855million in 2017 and a net income of US$12,662million.
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.[61][62]
As of 2019[update], Alphabet is ranked No. 15 on the Fortune 500 rankings of the largest United States corporations by total revenue.[63]
In October 2022, Alphabet recorded the weakest quarterly growth, with fewer sales in nearly a decade. The possible global recession, the strong US dollar, and the pandemics all contributed to the slowed economy.[65]
In 2023, Alphabet was ranked 7th in the Global 2000 (World's Largest Public Companies).[67]
On 26 April 2024, Alphabet surpassed a market valuation of $2 trillion for the first time. This surge follows the announcement of the company's first-ever dividend payout and a significant $70 billion stock buyback program. The company's first-quarter earnings also exceeded analyst expectations, further contributing to the positive investor sentiment.[68]
In addition to funding startups, Alphabet also invests in more mature companies, including publicly traded companies like Uber and privately held companies like Medium.[71]
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.[72]
In 2017, Alphabet Inc. sued Uber over technology similar to Alphabet's proprietary self-driving car technology. Alphabet's autonomous vehicle technology had 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.[73][74] 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 $245million at the firm's early 2018 value.[75]
In October 2018, a class action lawsuit was filed against Google and Alphabet due to "non-public" Google+ account data being exposed as a result of a privacy bug that allowed app developers to gain access to the private information of users. The litigation was settled in July 2020 for $7.5 million with a payout to claimants of at least $5 each, with a maximum of $12 each.[76][77][78]
On 2 December 2020, the National Labor Relations Board filed a complaint that claimed Alphabet Inc conducted unlawful monitoring and questioning of several workers at Google. The employees in question were fired for unionization attempts and protesting company policies. The board also alleges that Google unlawfully placed employees on administrative leave in retribution. Alphabet Inc has denied any wrongdoing and said it acted legally.[80]
On 7 June 2021, Alphabet Inc., announced it had settled an antitrust suit with the French Autorité de la concurrence with a payment of $270 million. The settlement amounted to less than 0.7% of Alphabet Inc.'s yearly earnings.[81]
On 12 June 2021, it was announced that Japan would launch an antitrust probe into Alphabet Inc. and Apple Inc. to determine whether their dealings with Japanese smartphone makers violate current antitrust measures or could necessitate new ones.[82]
In May 2022, Russian authorities seized Google's Russian bank account,[83] forcing them to file for bankruptcy one month later due to the inability to pay vendors and staff. However, free services such as Google Search, YouTube, Gmail, Maps, Android and Play were to remain available.[84]
In 2023, the company was criticized for conducting mass lay-offs without informing employees before they arrived to work, including many long-tenured and recently promoted employees. Around 12,000 jobs were cut, which reduced the company's workforce by 6%.[85] According to various posts on social media, several Google employees discovered they had been terminated after they were unable to access their accounts and confirming it through news articles discussing the mass layoffs.[86][87][88]
Lawrence Edward Page is an American businessman, computer engineer and computer scientist best known for co-founding Google with Sergey Brin.
Sergey Mikhailovich Brin is an American computer scientist and businessman who co-founded Google with Larry Page. He was the president of Google's parent company, Alphabet Inc., until stepping down from the role on December 3, 2019. He and Page remain at Alphabet as co-founders, controlling shareholders and board members. As of November 2024, Brin is the 7th-richest person in the world, with an estimated net worth of $153 billion, according to the Bloomberg Billionaires Index and Forbes.
Eric Emerson Schmidt is an American businessman and former computer engineer who was the CEO of Google from 2001 to 2011 and the company's executive chairman from 2011 to 2015. He also was the executive chairman of parent company Alphabet Inc. from 2015 to 2017, and technical advisor at Alphabet from 2017 to 2020. In November 2024, he was 48th richest according to Bloomberg Billionaires Index with an estimated net worth of US$35.4 billion.
Google LLC is an American-based multinational corporation and technology company focusing on online advertising, search engine technology, cloud computing, computer software, quantum computing, e-commerce, consumer electronics, and artificial intelligence (AI). It has been referred to as "the most powerful company in the world" and is one of the world's most valuable brands due to its market dominance, data collection, and technological advantages in the field of AI. Google's parent company, Alphabet Inc., is one of the five Big Tech companies, alongside Amazon, Apple, Meta, and Microsoft.
"Don't be evil" is Google's former motto, and a phrase used in Google's corporate code of conduct.
Google was officially launched in 1998 by Larry Page and Sergey Brin to market Google Search, which has become the most used web-based search engine. Larry Page and Sergey Brin, students at Stanford University in California, developed a search algorithm first (1996) known as "BackRub", with the help of Scott Hassan and Alan Steremberg. The search engine soon proved successful, and the expanding company moved several times, finally settling at Mountain View in 2003. This marked a phase of rapid growth, with the company making its initial public offering in 2004 and quickly becoming one of the world's largest media companies. The company launched Google News in 2002, Gmail in 2004, Google Maps in 2005, Google Chrome in 2008, and the social network known as Google+ in 2011, in addition to many other products. In 2015, Google became the main subsidiary of the holding company Alphabet Inc.
Criticism of Google includes concern for tax avoidance, misuse and manipulation of search results, its use of others' intellectual property, concerns that its compilation of data may violate people's privacy and collaboration with the US military on Google Earth to spy on users, censorship of search results and content, its cooperation with the Israeli military on Project Nimbus targeting Palestinians and the energy consumption of its servers as well as concerns over traditional business issues such as monopoly, restraint of trade, antitrust, patent infringement, indexing and presenting false information and propaganda in search results, and being an "Ideological Echo Chamber".
Pichai Sundararajan, better known as Sundar Pichai, is an Indian-born American business executive. He is the chief executive officer of Alphabet Inc. and its subsidiary Google.
David Carl Drummond is an American business executive and former lawyer. He served as senior vice president of corporate development and chief legal officer for Alphabet Inc., and, formerly, for its subsidiary, Google. Prior to joining Google, in 2002, Drummond was a partner at law firm Wilson Sonsini Goodrich & Rosati and then chief financial officer of software company SmartForce. Drummond retired from Alphabet on January 31, 2020.
The following outline is provided as an overview of and topical guide to Google:
Waymo LLC, formerly known as the Google Self-Driving Car Project, is an American autonomous driving technology company headquartered in Mountain View, California. It is a subsidiary of Alphabet Inc.
Susan Diane Wojcicki was an American business executive who was the chief executive officer of YouTube from 2014 to 2023. Her net worth was estimated at $765 million in 2022.
X Development LLC, doing business as X, is an American semi-secret research and development facility and organization founded by Google in January 2010. X has its headquarters about a mile and a half from Alphabet's corporate headquarters, the Googleplex, in Mountain View, California.
Ruth Porat is a British–American business executive who is the President and Chief Investment Officer of Alphabet and its subsidiary Google, LLC and prior to that was Chief Financial Officer of the same companies from 2015 to 2024. Prior to joining Google, Porat was the Executive Vice President & Chief Financial Officer of Morgan Stanley from January 2010 to May 2015.
Calico Life Sciences LLC is an American biotechnology company with a focus on the biology of aging, attempting to devise interventions that may enable people to lead longer and healthier lives. It is a subsidiary of Alphabet Inc.
Verily Life Sciences LLC, also known as Verily, is Alphabet Inc.'s research organization devoted to the study of life sciences. The organization was formerly a division of Google X, until August 10, 2015, when Sergey Brin announced that the organization would become an independent subsidiary of Alphabet Inc. with restructuring completed on October 2, 2015. On December 7, 2015, Google Life Sciences was renamed Verily.
John F. Krafcik was the CEO of Waymo from 2015 to 2021. Krafcik was the former president of TrueCar and president and CEO of Hyundai Motor America. He was named CEO of Google's self-driving car project in September 2015. Krafcik remained CEO after Google separated its self-driving car project and transitioned it into a new company called Waymo, housed under Google's parent company Alphabet Inc.
Big Tech, also known as the Tech Giants or Tech Titans, is a grouping of the largest IT companies in the world. The concept of Big Tech is similar to the grouping of dominant companies in other sectors. It typically refers to the Big Five United States tech companies: Alphabet, Amazon, Apple, Meta, and Microsoft; or the Magnificent Seven, which includes Nvidia and Tesla. Big Tech can also include Chinese companies such as Baidu, Alibaba, Tencent, and Xiaomi (BATX).
Kent Walker is an American legal executive who has served as President of Global Affairs and chief legal officer of Google & Alphabet since 2021.
Tensions between the multinational technology company Google and its workers escalated in 2018 and 2019 as staff protested company decisions on a censored search engine for China, a military drone artificial intelligence, and internal sexual harassment.
↑ "Google Code of Conduct". Alphabet Investor Relations. Alphabet Inc. April 11, 2012. Archived from the original on February 11, 2017. Retrieved March 25, 2017.
↑ Annual report 2017. Alphabet investor relations. March 2, 2018. pp.2, 3, 5, 6. Archived from the original on February 3, 2016. Retrieved December 3, 2018.
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US$307.4 billion (2023)
