Is fear a factor behind Google's radical reorganisation as Alphabet?
Google – sorry, Alphabet – is clearly looking to be able to expand beyond the label of 'search' that will always be associated with Google.
In the startup world it’s called a pivot. And Alphabet is clearly keen to keep its startup attitude. It enables it to be risky and adventurous with ventures that it is happy to see fail – or to see succeed enormously. It'll also protect some of its brands and ventures from any failure fallout. Putting these ventures at arm's length, or at least not in the Google backpocket, will enable Alphabet to distance itself from unpopular business decisions that might need to be taken.
Growing new business into new areas will undoubtedly cause upset in some quarters. It’s likely that not all of these are going to be smooth expansions into unchartered territory. There will be consequences for other businesses in related industries that won’t always be pleasant. Alphabet will want to protect its existing cash-generating core from any consumer or commercial backlash, as well as quarantine these new ventures from the more established routines of the older core businesses.
Hard truths
The other benefit will be the licence that Alphabet has given itself to put some distance between itself and its established businesses that are likely to face some challenging times. One example is the the online advertising industry which is in an appalling state.Google clearly dominates search advertising and holds sway in display, so has more than a little to answer for in perpetuating the ad tech mess.
Alphabet will be in a position to chastise the errant ways of Google, YouTube and DoubleClick in a manner it never could have done before. The threat being that Alphabet could build (or buy) a better solution elsewhere and put in place some healthier competition in these complacent sectors. As with any major corporate restructure there are likely to be casualties before the final hand is played.
Creating such a broad-reaching corporate entity does leave it in a difficult place. On one hand by separating out its businesses it’s clear it wants to be less monolithic and omnipresent than Google has become. But paradoxically it is setting up the ultimate umbrella corporation – and with it come all the connotations of the Resident Evil analogy. There is a certain irony for the ‘do no evil’ brigade in Google/Alphabet ranking for ‘umbrella corporation’ in it’s own search results.
Branding
The branding is an achievement in overstating the understatement.
The kid's play block look certainly positions Alphabet as far away as it can from an evil empire corporation. A clever move with a name that covers everything but says nothing in particular. Everything and nothing all at the same – a brand's dream canvas on which to write whatever they want.
Larry and Sergey definitely do want to go out into the world and play with a lot of toys. They’ve had their fun in the Google playground and now want to step out into the world. Their ventures will include any number of real world businesses as they move tech innovation from the online stage. It remains to be seen how the letters of this brand alphabet will fall.
The web address itself – abc.xyz – is a quirky twist in a world where decent top level domain names are virtually extinct. But then when you own Google you're never going to struggle with quirk-related SEO. We’re also certain to see a run on.xyz domains if it hasn’t already happened.
Fear and unicorns
With Google sitting pretty on billions of cash reserves there is a question why it would want to make such radical corporate changes. It could be put down entirely to the tireless vision of the founders, but there will be a large dose of fear driving this. Fear, to use the word in the loosest sense, of becoming an irrelevancy in the constantly progressing world of tech innovation. It will have looked at the stagnation that could happen with just sitting on that cash and a healthy twinge of fear, rather than a debilitating dread, will have inspired a change.
It could be that it is keen on doing a bit of unicorn hunting. There are an increasing number of tech unicorns that could fit quite comfortably in an Alphabet stable, that would not have worn a Google halter comfortably.
Will it succeed as a brand? Given their combined history you'd be hard pressed to say otherwise, but keep an eye out for some lower level implosions further down the Alphabet, and perhaps a few additions further up.
Guy Hatton is digital director at Clinic. He tweets @guyhatton