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] FoundersLarry Page andSergey Brin announced their resignation from their executive posts in December 2019, with the CEO role to be filled bySundar Pichai, who is also the CEO of Google. Page and Brin remain employees, board members, andcontrolling shareholders of Alphabet Inc.[9]
On August 10, 2015, Google announced plans to create a new publicholding company, Alphabet Inc. Google co-founder and CEOLarry 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 includingX Development,Calico,Nest,Verily,Fiber,CapitalG, andGV.[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 executiveEric Schmidt (now Technical Advisor) revealed in the conference in 2017 the inspiration for this structure came fromWarren Buffett and his management structure ofBerkshire 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 theDelaware 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 majorstock market indices such as theS&P 500 andNASDAQ-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 belaying 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, aUnited 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]
On 10 December 2024, Alphabet's shares rose about 5% after the company unveiled its new quantum computing chip, Willow. The chip solved a complex problem in five minutes, a task that would take a classical computer longer than the age of the universe. Willow reduces error rates in quantum computing and can correct them in real time, which could lead to breakthroughs in science, medicine, and finance. Alphabet's stock was up 25% for the year, marking its best day since April 2024.[26]
As of September 1, 2017[update], their equity is held by a subsidiary known asXXVI 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 alimited liability company, Google LLC.[32][33]
Eric Schmidt said at anInternet 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."[34]
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 theAndroid operating system,YouTube, andGoogle Search, which remain direct components of Google.[11][35]
Former subsidiaries includeNest Labs, which was merged into Google in February 2018[36] andChronicle Security which was merged with Google Cloud in June 2019.[37]Sidewalk Labs was absorbed into Google in 2021 following CEODaniel L. Doctoroff's departure from the company due to a suspectedALS diagnosis.[38]
In January 2021,Loon LLC CEO Alastair Westgarth mentioned in a blog post[39] that the company would be shutting down, citing lack of a scalable and sustainable business model. In July 2021, Alphabet announcedIntrinsic, a newrobotics software company spun out of X.[40] In November 2021, Alphabet announced a new company namedIsomorphic Labs, using artificial intelligence fordrug discovery and headed by DeepMind CEODemis Hassabis.[41]
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 ofvoting shares. The largest shareholders in December 2023 were:[42]
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.[46]
Alphabet has chosen the domainabc.xyz with the.xyztop-level domain (TLD), which was introduced in 2014. It does not own the domainalphabet.com, which is owned by afleet management division ofBMW. Following the announcement, BMW said it would be "necessary to examine the legal trademark implications" of the proposals. Additionally, it does not own the domainabc.com, which is the domain of theDisney-ownedAmerican Broadcasting Company.[47][48]
Google'smission statement, from the outset, was "to organize the world's information and make it universally accessible and useful",[49] and its unofficial slogan is "Don't be evil".[50] In October 2015, a related motto was adopted in the Alphabet corporatecode of conduct by the phrase: "Do the right thing".[51] The original motto was retained in the code of conduct of Google, now a subsidiary of Alphabet.[52]
As per its 2017 annual report, 86% of Alphabet's revenues came from performance advertising (through user clicks usingAdSense andGoogle Ads) and brand advertising.[62] Of these, 53% came from its international operations. This translated to a total revenue of US$110,855 million in 2017 and a net income of US$12,662 million.
On February 1, 2016, Alphabet Inc. surpassedApple 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.[63][64]
As of 2019[update], Alphabet is ranked No. 15 on theFortune 500 rankings of the largest United States corporations by total revenue.[65]
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.[67]
In 2023, Alphabet was ranked 7th in the Global 2000 (World's Largest Public Companies).[69]
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 billionstock buyback program. The company's first-quarter earnings also exceeded analyst expectations, further contributing to the positive investor sentiment.[70]
In addition to funding startups, Alphabet also invests in more mature companies, including publicly traded companies likeUber and privately held companies likeMedium.[73]
An analysis of the company's investments in 2017 suggested that it was the most active investor in that period, outdoing the capital arm ofIntel and also its own best customer. Alphabet, Inc. acquired seven of its own capital-backed startups in the 2017 financial year, withCisco second having acquired six of the company's previous investments.[74]
In 2017, Alphabet Inc. suedUber over technology similar to Alphabet's proprietaryself-driving car technology. Alphabet'sautonomous vehicle technology had been under development for a decade by Alphabet'sWaymo (self-driving vehicle division). Theproprietary technology is related to 14,000 documents believed to have been downloaded and stolen by a former Waymo engineer, subsequently employed by Uber.[75][76] 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 $245 million at the firm's early 2018 value.[77]
In October 2018, a class action lawsuit was filed againstGoogle 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.[78][79][80]
On 2 December 2020, theNational 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.[82]
On 7 June 2021, Alphabet Inc., announced it had settled anantitrust suit with the FrenchAutorité de la concurrence with a payment of $270 million. The settlement amounted to less than 0.7% of Alphabet Inc.'s yearly earnings.[83]
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.[84]
In May 2022, Russian authorities seized Google's Russian bank account,[85] 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.[86]
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%.[87] 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.[88][89][90]
^"Google Code of Conduct".Alphabet Investor Relations. Alphabet Inc. April 11, 2012.Archived from the original on February 11, 2017. RetrievedMarch 25, 2017.
^Annual report 2017. Alphabet investor relations. March 2, 2018. pp. 2, 3, 5, 6.Archived from the original on February 3, 2016. RetrievedDecember 3, 2018.
