Google Becomes a Part of Alphabet: What You Need to Know

The close of trading today will spell a new era for Google as the search giant becomes a part of new holding company Alphabet Inc.

Google announced today it expects stock from “Google Inc.” will transfer to “Alphabet” at the close of the business day. Google’s Class A and C stocks will swap the Google name for Alphabet, however both types of shares will keep their respective ticker symbols, GOOG and GOOGL, along with the same shareholder rights.

The decision to slim down Google and make it a subsidiary of the newly created Alphabet was announced in August and is intended to allow each company to focus on what it does best. Google has always been a search engine and advertising business at its core but over the years it’s grown into a company with diverse interests ranging from self-driving cars to home automation systems. The idea of Alphabet is to spin off some of those businesses from Google.

Larry Page is CEO of Alphabet, while fellow Google co-founder Sergey Brin serves as president. In a blog post announcing the change, Page said that Google is “operating well today, but we think we can make it cleaner and more accountable.”

Here’s a look at the biggest changes of the reorganization.

What’s Part of a Slimmed-Down Google

Google will be solely focused on the company’s core Internet businesses, including search, advertising, maps, YouTube and the Android operating system. Sundar Pichai, who has effectively been leading Google’s day-to-day operations, will step into the CEO role.

What It Means for Investors

Investors can expect two segments for financial reporting beginning in Q4, with the slimmed down Google broken out separately from the other Alphabet businesses, which will be reported as a whole, according to an SEC filing explaining the reorganization.

What Else Is Under the Alphabet Umbrella

Page said “companies that are pretty far afield of our main internet products” will be separated from Google and become a part of Alphabet.

Google X, the semi-secret incubator that has spawned projects such as self-driving cars and Wing, a drone delivery service, will move to Alphabet. Other companies under Alphabet’s control will be Nest, the connected home products company; Fiber, Google’s high-speed Internet service; Google Ventures and Google Capital.

Alphabet’s Role as a Parent Company

Each business unit under the Alphabet umbrella will be run by a CEO, with Page and Brin determining their compensation.

“We will rigorously handle capital allocation and work to make sure each business is executing well,” Page wrote in a blog post. “The whole point is that Alphabet companies should have independence and develop their own brands.”

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