Google has become so renowned and ingrained in our daily lives that it’s the first thing that pops into your head when you want to know the answer to almost anything. “Google it” has become an in-built reaction to being asked a question you don’t know the answer to. Why then, would this tech giant choose to change their name and move away from this incredibly well known status?
Well it is more than just a simple name change and Google isn’t going to be disappearing any time soon. “Alphabet”, the ‘new name’, will actually be a holding company with Google becoming a subsidiary of Alphabet.
So what’s the reason for all this shuffling around? Google have said that they want to avoid being a ‘conventional company’! Google believes this new structuring will allow it to grow in the tech industry through innovative and revolutionary ideas rather than just doing the same old search thing.
The creation of smaller subsidiaries within Alphabet enables the separate parts of the company to operate as separate legal entities. By utilising this structure in most circumstances there is a clear separation of liability, both legal and financial.
Google is not alone in utilising a holding company structure, most large brands operate in this way. Venturing into different sectors is always a risk but a holding company structure can minimise this risk, if a venture does not pay off then a more successful arm of the business can be protected.
A holding company can also help protect any valuable Intellectual Property that you use as part of your brand – so you do not risk your Intellectual Property being lost if, by way of an example, the travel arm of your IT business is not successful!
More still, if it came to it, Google will find it easier to get rid of these subsidiaries entirely.
What will Google do?
- Search engine
What will Alphabet do?
- Calico (Research and development into the biology that controls lifespan)
- Nest (Reinventing home products)
- Fiber (Internet)
- Google X (Semi-secret facility making major technological advancements)
- Life sciences
If you are interested in finding out whether a holding and subsidiary company structure would be suitable for your business contact our experienced company/ commercial team who will be happy to assist you.
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