Google, Inc. has just announced the creation of a new company called Alphabet, as part of its plan for a new operating structure that will make Google cleaner and more accountable, according to a blog post in Google by Larry Page, CEO and co-founder of Google.
The new company will act as a holding company for its subsidiaries, as a way to separate Google's core internet and web advertising business from its other ventures like Life Sciences and Calico.
Page also said in the blog post that he believes the new company will allow for more management scale, as they run things independently from things that are not related.
"Alphabet is about businesses prospering through strong leaders and independence," he said. "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 the new structure, Google will be retaining the company's web-based businesses and the rest of Google's other ventures will be under Alphabet, with each venture having their own CEO.
Reuters adds that the move is the company's attempt to focus on more creative and ambitious projects.
"It suggests that in all likelihood, Google is not going to slow the pace of their experimental processes like self-driving cars," Michael Yoshikami, Head of Destination Wealth Management, told Reuters. "It suggests they're really going to try to be like a tech conglomerate combined with VC."
Page will be the new CEO of Alphabet and Google co-founder Sergey Brin will become its president, according to the blog post.
Sundar Pichai, who is the senior vice president of products, will be Google's new CEO.
Alphabet Inc. will replace Google Inc. as the publicly-traded entity, according to the blog post.
All the shares of Google will automatically be converted into the same number of shares of Alphabet. It will also retain all of the same rights that the original shares have.
Reuters adds that the news of the shakeup has sent Google shares up almost 7 percent to $708 in after-market trading.
