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Alphabet – world’s most valuable company, but what does it do?


Alphabet – world’s most valuable company, but what does it do?

A surge in shares of Alphabet, the conglomerate that includes search giant Google, saw it overtake Apple as the world’s most valuable company last week. The development is unlikely to surprise people tuned in to what Alphabet is and does, but to outsiders simply viewing a list of the top five most valuable (and therefore widely reported as ‘biggest’) companies, it might appear an oddity for what is not yet a household name to oust the company behind iPads and iPhones from the top spot, as well as outmuscling giants like Microsoft, Facebook and ExxonMobil.

After all, even an octogenarian who has barely used a computer in their lifetime will probably have an idea of what Google is, but the parent company behind it remains something of a mystery. At Engage Web, we thought it was about time we all made an effort to learn a little more about a company that’s technically just four months old, yet has a market value of $547.1bn (£373.6bn).

Why Alphabet?

Google announced last August that it wanted to establish a holding company for the many massive things it now has its mitts on, so created Alphabet as its parent. By October 2 last year, the move was complete and Alphabet had officially been founded.

At the time, many observers noted what a generic name ‘Alphabet’ was, and how many already established companies shared its name. Indeed, Alphabet doesn’t even own the domain alphabet.com (it instead went with abc.xyz), so why was such an ordinary name chosen?

Alphabet CEO and Google co-founder Larry Page explained:

“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!”

Simple enough, we suppose, and when you have Google and all it entails as part of the package, brand recognition is ultimately going to be more of an issue for those companies that beat Google to the game in choosing Alphabet as their name.

Google is massive, why does it need a ‘parent’ company?

It’s perhaps because of the size of Google that Alphabet was deemed necessary. It’s not been set up to make Google look bigger than it is, but rather to separate some of the very different companies and services in its arsenal so that each can be given more focus while still being overseen by the conglomerate at the top.

Page talks of facilitating a “cleaner” and more “slimmed down” Google, with Google Inc. now able to focus more heavily on the internet-related side of its output, while Alphabet mops up all the other rather large bits and pieces that Google has thrown its considerable weight behind since it was founded in 1998. He also said he wanted greater transparency, which might be music to the ears of those who remain not entirely satisfied with the £130m total of tax Google is to pay back to account for the last 10 years.

Does Alphabet do anything else except Google?

Not really. Well, it does more than just the search engine, but Google has become a lot more than that. Ventures like biotechnical company Calico and life sciences division Verily, both of which were founded by Google, now come under the Alphabet umbrella.

Of course, the real heavyweight of Alphabet’s subsidiaries is Google Inc., which remains the body under which the search engine, YouTube and Android phones operate.

What next for Alphabet?

With Apple sometimes thought to be missing the beat these days since the death of Steve Jobs, and the Apple Watch widely reported as being a flop, it’s hard to see Apple taking back its crown immediately. Meanwhile, some observers believe that Google/Alphabet is about to get more heavily involved in American healthcare, the direction of which could vary dramatically depending on who the nation elects as its president later this year.

In short, Alphabet is Google and everything we’ve come to associate with it, but it’s Google itself that’s now a little different. It may be the case that the rise of Alphabet causes us to associate Google solely with the internet, perhaps in a similar way to how PepsiCo owns brands like Pepsi, Quaker and Walkers, yet we immediately associate them with completely different food products.

That raises the question of whether our increasing association of Google with the internet will lead us to increasingly associate the internet with Google. We already ‘Google’ phrases rather than ‘search’ them, but will our language change further to reflect the Google-centric nature of the web? It may be left to Alphabet to spell it out.

John Murray

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