Google name change makes sense for a massive business

In case you missed it this week, Google is now Alphabet.

It’s still GOOG and GOOGL on the stock exchanges, and there’s still a company called Google but, officially, Google is now just part of a larger entity, a holding company called Alphabet, rather than being the alpha and omega itself.

Google will remain where you go to do searches and is the company that will run Gmail, offer YouTube videos, supply maps and the Android operating system for phones and computers. In short, Google will still be where much of the internet functionality of the company centres, according to a blog post by Google co-founder Larry Page.

Page was chief executive of Google, but now becomes chief executive of Alphabet (which has the rather cutesy web address of http://abc.xyz), with co-founder Sergey Brin as president.

Meanwhile, Sundar Pichai will become chief executive of the slimmed-down Google. It's a big promotion for Pichai, who was looking after the product and engineering side of Google's internet business.

Needless to say, there’s been plenty of speculation about why Google is doing this, and why now. You won’t get any more information from the Alphabet website, as its entire content this week was simply a reposting of Page’s blog post. Among onlookers, theories range from the financial to the conspiratorial.

On the secret plotting end of things is an article on Buzzfeed that suggests a major motivation is that Alphabet will help to cleanse Google of any direct link with some of its “creepier” projects, of which, admittedly, there have been a few. The subheading for the Buzzfeed piece summarises this angle: “Alphabet is a business move, but its true power is rhetorical: Add another company name, and you can preserve the Google name by untethering it from its broader, creepier efforts.”

Yes, Google pursues some unnerving projects and also, as writer Charlie Wurzel notes in the piece, its day-to-day core business of gathering and parsing its users' data, often in ways to which they remain oblivious, raises many privacy concerns.

But I don’t really buy the argument that Google would restructure with this in mind, even as a secondary benefit. The attitude within the company has never been that any of these things are so creepy that they need to be hidden away.

Millions of users

If anything, like many technology companies, Google has had the view that if the technology or service is cool, millions of people will be happy to take part in a trade-off of giving something they generally barely notice (their data), even though they should, to get something they will value (email, searches, maps), generally for free .

And, also like many technology companies – especially those in the internet and social media space – Google can be so focused on making things it believes are cool that it totally underestimates user discomfort, or the reaction of third parties.

A good example was Buzz, the Twitter-like community that Google launched in 2010 that automatically transferred all of your most active contacts into your followers and set you up to follow them. The problem was that the default setting for your profile allowed anybody to see those lists and view your formerly private contacts.

And there is Google Glass, the internet-enabled specs, which made many people feel they were under casual surveillance by wearers, causing a backlash against the product and even attacks on Glass users in public places.

For better or worse, I am sure Google – or Alphabet – will continue to experiment with such projects, with some successes and some disasters. But the company has demonstrated repeatedly that it intends to push into new and sometimes discomfiting areas. Even if the nomenclature changes, it’s still going to be associated with Page and Brin.

On the other hand, the business motivation for the reorganisation makes sense, as the Wall Street Journal outlined in its Moneybeat blog. Already, the markets have shown they like what new chief financial officier Ruth Porat has been doing as she takes steps that create greater financial transparency across a huge internet company with added exotic ventures into healthcare, self-driving cars and space exploration.

Rising stock

Shares are up 24 per cent in the last month, adding $90 billion of value to the company. They rose 4 per cent the day following the holding company announcement. Result.

I also think – taking Page at face value in his blog – the reorganisation is a sensible move given the increasingly confusing diversity of what the company formerly known as Google does. Email, online maps, internet search, longevity research . . . it makes you want to sing the old Sesame Street song: "One of these things is not like the others/One of these things just doesn't belong."

So put it somewhere else, account for it in the financials, and get on with things. That pretty much sums up a change most people are hardly even going to notice or care about, because core Google user services remain Google.