THE ABCs OF ALPHABET'S INTERNATIONAL BUSINESS

“Each Alphabet business can make its own decisions on which countries to operate in.” - Sergey Brin, Google Co-founder and President of Alphabet, Inc.

*Image courtesy of Ars Technica 2016 Google Tracker Report

*Image courtesy of Ars Technica 2016 Google Tracker Report

Two years ago, on October 2, 2015, Google completed a reorganization into a holding company called Alphabet.  Google was made into Alphabet’s leading subsidiary under the leadership of a new CEO, Sundar Pichai, and would serve as a separate division for all of Alphabet’s established Internet-related products and services including Android mobile software, Google Maps, Google Search, and Youtube.  Alphabet’s remaining ambitious initiatives in artificial intelligence, autonomous cars, healthcare, innovation, life sciences, smart appliances, and venture capital would remain under the leadership of Larry Page and his Google cofounder, Sergey Brin, as Alphabet’s CEO and President, respectively. 

In a letter to investors, Page wrote that, “Alphabet is about businesses prospering through strong leaders and independence.  In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed.  We will rigorously handle capital allocation and work to make sure each business is executing well.  We’ll also make sure we have a great CEO for each business, and we’ll determine their compensation.”[1]  Eric Schmidt, Google’s former Executive Chairman, would retain the same role at Alphabet.  Schmidt said that, “Most companies just grow the same, but ultimately, you have to organize differently, so you have to organize around the people who have the biggest impact.  So what we did, is we took those people and put them in charge of companies.”[2]

While Alphabet’s structure streamlined the management of each the businesses within the holding company, the international business environment continues to be complex for Google and that will certainly be the case for the other companies within the Alphabet portfolio as they grow.  After all, Google’s mission is “to organize the world’s information and make it universally accessible and useful.”  During the Alphabet announcement, Sergey Brin told the Wall Street Journal that, “Each Alphabet business can make its own decisions on which countries to operate in.”[3]  Therefore, each component of Alphabet will eventually encounter different levels of political risk and economic development, social and cultural issues, science and technology policies, and legal systems around the world. 

After all, doing business in Mountain View is different than doing business in Madrid, Melbourne, Moscow, or Mumbai.  Even though each company within Alphabet is a totally separate and distinct company with its own CEO, Alphabet’s success will depend on its ability to create international strategic webs of cooperation and collaboration across its companies, developers, employees, projects, and stakeholders while anticipating opportunities and challenges on a global scale.  Alphabet’s technologies will show us the future, and the way Alphabet develops as a holding company may show us the future of international business. 

In his 2015 letter to investors, Page explained the origin of Alphabet’s name, “We liked the name Alphabet because it means a collection of letters that represent language, one of humanity’s most important innovations, and is the core of how we index with Google search!  We also like that it means alpha‐bet (Alpha is investment return above benchmark), which we strive for!  I should add that we are not intending for this to be a big consumer brand with related products—the whole point is that Alphabet companies should have independence and develop their own brands.”[4] 

After Alphabet’s announcement, Mike Murphy and Akshat Rathi at QUARTZ wrote a blog post to illustrate that Alphabet had a business, product, or project for each letter of the alphabet.[5]  For example, “A” is for Android, “B” is for Blogger, etc.  With a nod to Mike and Akshat, this ambitious interconnected multi-part blog post series explores Google’s accomplishments in various countries and the emerging opportunities for the rest of Alphabet strictly through the lens of international business.  Each blog post starts with a letter of the alphabet and features information about Alphabet's activities outside of Silicon Valley.  The next part of this blog series on the ABCs of Alphabet will be “A” for Australia.

*Image courtesy of Trey Ratcliff at StuckinCustoms.com

*Image courtesy of Trey Ratcliff at StuckinCustoms.com

NOTES:

[1]  Alphabet Investor Relations: 2015 Founder's Letter available at: https://abc.xyz/investor/founders-letters/2015/

[2]  CBS This Morning: "How Google Works" authors on how Alphabet works, dated March 22, 2017, available at: www.youtube.com/watch?v=eodhkjw9l5I

[3]  Wall Street Journal, Some Alphabet Units May Return to China Ahead of Others, Brin Says, by Alistair Barr, dated October 29, 2015, available at: https://blogs.wsj.com/digits/2015/10/29/some-google-units-may-return-to-china-ahead-of-others-brin-says/

[4]  Alphabet Investor Relations: 2015 Founder's Letter available at: https://abc.xyz/investor/founders-letters/2015/

[5]  Quartz Media: All of Google’s—er, Alphabet’s—companies and products from A to Z, by Mike Murphy and Akshat Rathi, dated August 11, 2015, available at: https://qz.com/476460/here-are-all-the-alphabet-formerly-google-companies-and-products-from-a-to-z/