Alphabet Inc.

Company information

• Date founded: 2015 as Alphabet, Inc; 1998 as Google
• Industry: Technology
• Corporate headquarters: Mountain View, California
• Type: Public

Overview

Alphabet Inc. is an American multinational conglomerate holding company focused on technology. Headquartered in Mountain View, California, it was formed by the restructuring of tech giant Google in 2015. The move made Google a subsidiary of Alphabet Inc., along with some entities that were previously subsidiaries of Google. At its creation, Alphabet ranked among the top five technology companies in the United States, along with Facebook (which became Meta), Amazon, Apple, and Microsoft.

At the time of the restructuring, Google cofounders Larry Page and Sergey Brin continued as senior managers, controlling shareholders, and members of Alphabet Inc.’s board. They relinquished their management roles with Google in 2019 in favor of assuming similar roles with Alphabet. They continued to be board members and controlling shareholders in the company.

A public company, Alphabet Inc., has a number of subsidiaries that do business in a variety of technological fields. These fields include the internet, computer hardware and software, robotics, artificial intelligence, autonomous driving, drone delivery, health and biotechnology, space launch technology, and venture capital that supports these industries. The company’s founders indicated an intention to diversify and expand into other technology fields.

History

Alphabet Inc., had its beginnings in 1995 when its cofounders met at Stanford University. Brin was pursuing a degree in computer science when he was asked to give a tour to Page, who was considering pursuing a doctorate at Stanford. The pair had a shared interest in finding a way to organize the growing number of sites on the internet. They created a search engine that was able to rank web pages based on their importance and relevance.

This search engine—originally named Backrub—was renamed Google. Page and Brin intended to call it googol, the mathematical term for the number 1 followed by 100 zeros. However, a friend who was attempting to help them register the new site’s domain name on the internet misspelled it as “google.” When it was discovered internet domain names with googol were already taken, they decided to use the misspelling and call it Google.

Google proved to be so different from other search engines available at the time, that Brin and Page gained attention from investors. While they were still at Stanford, they used these investor funds to move Google into a garage in Menlo Park, California. From that start, Google began to develop its reputation for doing business in a different way. The garage office featured bright blue carpeting and ping pong tables for employee use—the beginning of the playful and colorful nature that became one of the company’s identifying characteristics. In 1998, the company introduced the Google Doodle, a small cartoon featured on its homepage that ties into something related to the calendar day or season. The first doodle was a stick figure that let visitors to the page know that all of Google’s staff had taken the day off to go to a festival.

By 1999, the company was employing fifty people and needed bigger quarters. It moved to Mountain View, California, to an office complex it named the Googleplex. Page became the company’s chief executive officer, while Brin served as its president. Google employees included engineers, sales personnel, and a wide range of tech and support staff. By 2014, it was the biggest employer in Mountain View. It employed more than 11,000 people and owned more than 10 percent of all the town’s property, including an airport.

By 2015, Google had added or acquired several subsidiary businesses. It developed products such as Google Books, a digital book database started in 2004, Google Maps for navigation in 2005, and the Android platform for mobile devices in 2007. It also added products and services innovated by others, such as the online video service YouTube, acquired in 2006; DoubleClick, an ad management service acquired in 2008; Waze, a crowdsourcing navigation program developed in Israel and acquired by Google in 2013; and Nest, which provides home security products and services, acquired in early 2014.

On October 2, 2015, Alphabet, Inc., was founded. The company officially emerged a few months after Google’s founders announced it as part of a blog post. The post also noted Alphabet would become a conglomerate holding company with several subsidiaries, all of which were formerly part of Google, including Google. Alphabet itself does not offer any products or services. In announcing the new company, the founders indicated they chose the name Alphabet because of its connections to the building blocks of language, which are also at the foundation of the organization principles Google used for its search engine. It also ties into the investing term alpha bet—an investment that returns profits beyond the expected standard.

The move was part of a strategy that allowed the company to continue to expand and innovate while protecting its successful and profitable core businesses in internet technology. Since the formation of Alphabet, the original founders stepped down from their leadership roles at Google. Page became the Chief Operating Officer (CEO) of Alphabet, while Brin became the company’s president. A new CEO, Sundar Pichai, took over at Google and reported to Page. In addition, other subsidiaries were acquired, including business software and data analytics company Looker, acquired in 2020; Fitbit, which focuses on personal wearable fitness devices and apps and was added in 2021, and Mandiant, a division with a cybersecurity focus, added in early 2022. Google also acquired Israeli security startup Siemplify for $500 million to bolster its cybersecurity offerings in 2022.

In 2023, CNN reported that Alphabet planned to lay off around 12,000 employees amid economic uncertainty following a hiring boom during the COVID-19 pandemic. Similar layoffs also occurred at Microsoft, Amazon, and Meta, among others. The same year, Google acquired Photomath, an AI-driven math-solving mobile application. In 2024, Google acquired the virtual application delivery company Cameyo. Late in the same year, the European Court of Justice upheld a €2.42 billion fine against Google for antitrust violations over its shopping service, and the US Department of Justice proposed significant changes to address Google's search monopoly.

Impact

The creation of Alphabet, Inc. resulted in several positive effects for the company. In addition to an immediate uptick in trading on the stock exchange, the restructuring provided additional financial benefits. In 2020, Alphabet became a Fortune 500 Company, recording more than $40 billion in profits. As the parent company for a wide variety of tech brands, including Android, Chrome, and Google Play, Alphabet is one of the largest tech companies in the world, and Forbes magazine named it one of the world’s most valuable brands.

Even though Alphabet is a holding company for its subsidiaries and produces no goods or services on its own, the conglomerate provides many benefits for the companies under its umbrella. One major benefit is the separation it provides. For example, having Nest—which provides home security devices—being a subsidiary of Google, which has extensive experience in gathering and coordinating internet activity—raised concerns about the potential for misuse of personal information. The distance provided by having them as separate subsidiaries helps to minimize these concerns. The change also allows for expansion beyond the company’s original focus on internet technology. In addition, experts have noted making all the companies under Google subsidiaries of another company allows for the type of innovation and risk-taking that characterized Google’s growth from its earliest days without putting other subsidiaries at risk.

The company’s heavy focus and expertise in internet technology were beneficial to its growth as the COVID-19 pandemic unfolded in 2020 and 2021. The company was well-positioned with resources and products when data and media streaming became an important part of how people adapted during the pandemic. Google Cloud—a storage system for internet-based data and media—was expanded into numerous countries and locations, while YouTube became even more popular as a streaming media platform. As a result, Alphabet’s market share, profits, and stock price all rose greatly in 2021, with net income rising by more than 121 percent.

The Google search engine is one of the most often used worldwide. Over 80 percent of all searches worldwide start on Google. It has become so entrenched in everyday life that the phrase “Google it” has become almost synonymous with doing an internet search. Experts say this pervasiveness, along with its many products that people have come to rely on, such as Gmail and its Cloud and Android services, secured Alphabet's place as a fixture in the business world.

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