What can we expect to see following this news out of Google?
It has been less than 24 hours since the news broke that the Internet’s 800-pound gorilla decided to put itself under the brand of the freshly announced Alphabet parent company. Other than clarifying that Larry Page will serve as the CEO of the holding company, and Sergey Brin as the president, there was a dearth of details pertaining to a clear direction for where this move will take the company.
While it appears that Google as an Internet search engine with its accompanying AdWords platform will remain intact under the leadership of new CEO Sundar Pichai, along with other staples like Gmail, Drive, and Maps, the statements from the company have indicated that other divisions such as the Life Sciences will step up to become their own individual brands under Alphabet.
Why exactly Google has decided to make these seemingly tectonic shifts in their company’s structure remain unclear, but there are several reasons this might be a good idea for them moving forward.
Making a cut with the mothership
As the world’s #1 search engine, it is bound to have encountered its fair amount of criticism over the years.
These critiques have included cautious concern regarding privacy rights and proper differentiation of ads from organic searches. Harsher complainants have accused them of being “gatekeepers” through anti-trust actions, while more outrageous claims have stated that Google was selling information to the U.S. and UK intelligence services or held all the rights to content created on Drive.
Whether or not these accusations against Google hold any water is less to the point. Creating some level of daylight between the Google brand and their other ventures, at least for the optics, would seem to make sense. Giving these other projects the opportunity to blaze their own trails without the instant recognition that they are a part of the corporate giant appears to be the right thing.
“A company that bases nearly 90% of their revenue on advertising will look to diversify.”
In speaking with Josh Rodin of JDR Digital, a search engine marketing consultancy firm, he makes the point that a company that bases nearly 90% of their revenue on advertising will look to diversify. He notes that in recent years, Google has branched out to new avenues with the creation of the Android OS, Chrome, and products like Waze that have helped enhance their ability to gather user data for better targeting their ads.
However, they have also moved towards buying other types of business like MIT’s Boston Dynamics. Their research into Life Sciences and self-driving cars indicate that they are interested in moving towards a wider range of products unrelated to their search engine business.
In a blog post discussing the move, CEO Larry Page explains that, “Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed.”
In breaking down the structure into smaller business components, Rodin notes that each CEO will be able to better grow their projects without having to deal with the bureaucracy. This will make them more nimble and allow them increased freedom.
Taking their next steps
In judging how this move will play out in the months ahead, it is important to state that the average Google user is unlikely to notice any changes to their services. The most popular services like Gmail and search will continue to operate as usual, and the public will simply become aware of a larger company calling itself Alphabet.
However on another level, this is an exciting time in the development of tech and business. With this break comes new opportunities for many of these “side projects” to get legs of their own and start to run at a significantly faster pace. Whether it is their robotics, ventures, or health projects, the next few years is likely to see wondrous new innovations coming out of the house that Google built.
Now that they have organized the world’s information, it is time for the next big idea. I give my vote to curing cancer.