There has been an overwhelmingly positive response from technology pundits and financial markets alike at Google’s bombshell announcement of changing its name and folding itself into a new conglomerate called Alphabet. The company will no longer depend on search alone; Google’s nascent efforts will be advanced by stand-alone companies in various fields such as energy, health and transport. This deal is said to resolve a number of Google’s problems ranging from difficulty in retaining talent to lack of transparency in financial reporting. It is astounding how a company as dysfunctional as Google has managed to survive so long.
Yet, the Alphabet announcement is laced with despair rather than chutzpah as the actual problems faced by the search engine giant are structural and corporate fiat isn’t sufficient enough to solve them. The publicity surrounding the Alphabet announcement can only temporarily conceal the sprawling data monopoly within Google. This means that Alphabet is basically an example of corporate plastic surgery and it makes one prominent point explicit; the founders of the company are basically embarrassed and tired of its core businesses. After all, selling ads doesn’t require you to have a PhD from MIT or Stanford and the scientists on Google’s payroll must have to deal with an identity crisis on a regular basis.
Advertising wasn’t terribly exciting for Google’s founders either, but they were forced to accept it as a necessary evil. After nearly 20 years, they are no longer satisfied with being traffickers of ads that are generated automatically. Instead, they want to be radical geeks and abolishing ageing and curing cancer are just some things that can help them in achieving this status. Only Bill Gates have come close to doing so and he was able to make money by selling his software. Google, on the other hand, remains an advertising company that has a lot of computer scientists on its payroll.
The Alphabet restructuring deals with these concerns on the surface as it emphasizes all the techy areas ranging from smart energy to self-driving cars to health, which Google has invested in. However, it also brings out a harsh reality; Google is just an ad company and is trying to look into other areas in order to satisfy Wall Street but without any fundamental changes in the company’s operations. Therefore, the Alphabet announcement is nothing short of terrifying for Google employees. After the embarrassing failures of Google’s ill-fated social network Google Plus and also Google Glass, the search engine giant has only added a legal gloss to its existing structure and nothing more.
Nonetheless, Wall Street added insult to injury by rewarding this news with a stock rise that boosted the company’s value by $20 billion. The difficulty in innovation for Google isn’t because of its dependence on advertising; it is how advertising and search are connected. Search is made unnecessary through Google Now and similar products where advertisements cannot be profitably incorporated and this has led to stagnation in the company’s own products and this problem isn’t really addressed by the Alphabet restructuring.