On December 4, Larry Page and Sergey Brin, two Google co-founders, announced that they would transfer the right of control to Google’s current chief executive, Sandar Pichai (Sundar Pichai). At the same time, Larry Page will step down as CEO of Google’s parent company Alphabet, while Sergey Brin will also step down as president and the position will be cancelled.
Google’s official website released the news from these two joint disclosures. Affected by this news, the stock price of Alphabet rose 0.8% in after-hours trading.
Larry Page and Sergey Brin founded Google in 1998 and grew it from a startup search engine company into a global company. In August 2015, Google announced that it reorganize. Larry Page and Sergey Brin founded a new holding company Alphabet and began to assume the above positions. Alphabet will replace Google on the Nasdaq. All Google shares will be automatically converted into the same number and equity of Alphabet shares, then Google became a wholly-owned subsidiary of Alphabet. Under the new structure, Sandal Pichai became CEO of Google, where he was responsible for the Android and Chrome businesses.
After this reorganization, Alphabet has developed into a huge group. In addition to Google, its portfolio includes Google Ventures, Google Capital, Google Labs Google X, biotechnology company Calico, life science research institution Verily, and wind power system development company Makani etc. By setting up a holding company, Google has explained that it hopes that the core Google Internet services are “cleaner and more responsible”, while allowing greater autonomy to run businesses outside of Internet services. Nest Labes, acquired by Google in 2014, operated independently under this system, but in 2018, it was no longer a separate business after it was merged into the Home Appliances Division.
However, since 2019, Google faces a series of crises. On the one hand, like competitors such as Amazon, the Internet giants are facing increasingly stringent government regulations, and Google is facing extensive antitrust investigations. On the other hand, Google’s core digital advertising business showed signs of slowing down. In the first quarter, the growth of the advertising business slowed down, and the third quarter profit was lower than 2018. Google Cloud Computing is growing, but the company also wants to generate revenue through hardware.
The above letter disclosed that Larry Page and Sergey Brin will continue to be members of Alphabet’s board of directors. “Although it is a great honor to be able to participate in the daily management of the company for a long time, we think it is time to take on the role of a proud parent-to provide advice and care, not to slap each day.” They continue to communicate, especially the topics they are passionate about.
Not only that, the co-founders still own the company’s voting shares. Larry Page holds about 5.8%, while Sergey Brin holds about 5.6%, and Sandal Pichai holds about 0.1%. Google said that according to this announcement, its voting structure has not changed. That is, they will continue to have a majority voting right on the company’s decisions through a dual equity structure.
Google also released an email written by Sandal Pichai at the same time. In the email, he said that the only thing he saw in Google’s 15 years was change. This change will not affect Alphabet, nor will it affect daily work today.
At present, the market value of Alphabet is close to 900 billion US dollars, and the stock price has risen 23.9% year-to-date.