What We Know About Google’s Alphabet Soup

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The world’s most dominant Internet company — its most ambitious and, yes, often its most feared — is now just three engineers, a lawyer and a financier. And, so far, no public-facing executive investors can reach to hold the company to account.

That’s the entirety of Alphabet, the new holding company Google created yesterday to grease the wheels of the search engine’s entrance into a bevy of industries. Google heralded the move as a way to bring “transparency and oversight” to its business. And Wall Street raved. Investors sent its stock up and analysts nearly unanimously lauded the decision.

For them, it solved two central problems for the $GOOG ticker: 1) How to preserve aggressive research and acquisitions without denting the profitable search ads business, and 2) how to retain talent. Google has lost a flood of smart people. Giving its internal CEOs that title and freedom, plus a startup sheen, could help keep execs from fleeing. The real lure here is the promise that the portfolio executives will have domain over their companies, and the equity with it. Also, Page may have passed over his biggest headache, the pending European Union antitrust investigation, to new Google CEO Sundar Pichai as well. (Google’s deadline for an official response to the charges is Monday.) Still, we don’t know for sure.

In essence, this keeps Google, now 57,000 or so people, from becoming Bell Labs or Microsoft — growing too large and unwieldy to do anything but deflate.

“[T]he GOOG story is just starting to hit its stride, there is significant upside from current levels and we want to be there for the whole ride,” Deutsche Bank analyst Remy Martin wrote on Tuesday morning. “Buy.” (By Mark Bergen – recode.net)