11 Aug 2015

Google: is it at risk of going against its own ‘don’t be evil’ mantra?

Does bigger always equal better? Or should we beware a Google with ever sprawling tentacles?


For a long time now Google watchers have been wondering how all its disparate products – from internet search to drones to thermostats to driverless cars – fit together under one roof. And the truth is, they didn’t. And it’s this, so Google tells us, that’s the driving force behind the surprise announcement over night that it’s to set up a new holding company called Alphabet.

It is testament to Google’s mega success that it’s become so big and so diverse a business that it now needs, effectively, to be broken up into its constituent parts- to give each a chance to grow at the same rate as the original internet business did 17 years ago.

Since then Google has morphed into a completely different beast, at its heart still an internet technology company that seeks, not unambitiously, to organise the world’s information. But also so much more besides.

It says something, doesn’t it, that under this new structure Google is relegated a mere “subsidiary” of Alphabet! A company with a market capitalisation of $487bn. It will now be slimmed down to consist of the core internet products – the search engine, YouTube, and its android operating system complete with maps, ads and apps.

The rest of Google – as was – will now be split out into other independent businesses inside Alphabet, each with its own bosses, to give them a chance to grow at the same rate, Google says.

They include the company’s “smart-home” division called Nest, which aims to connect “conscious” devices, Calico, whose humble ambition is to halt the human ageing process, as well as investment arms, Google Ventures and Google Capital, which finance start-ups intended to be the next big thing.

But the one everyone’s talking about … is the mysterious X Labs. The unit outside Google where fellow founder Sergey Brin has spent most of his time in the last few years. It’s where the blue-sky thinking goes on. Where Google ultimately wants to develop the next set of products that will, it hopes, shape the way we live in much the same way as internet search has revolutionised how we interacted with the web over the past decade.

X Labs includes Google’s (sorry, Alphabet’s) much vaunted ambitions to have us transported around in driverless cars. Drones will see us receiving deliveries any time, any place, while special contact lenses will help diabetes sufferers measure their glucose levels from their tears.

And those are the projects in Google’s rear view. Ahead, there are rumours of hoverboards and space elevators, to name but a few. Most of them we don’t know about.

Mr Page says this restructuring is all about allowing Alphabet “to do things other people think are crazy but we are super excited about” and to get “more ambitious things done”.

Mr Page told staff. “We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.”

Google’s used to feeling uncomfortable. It’s been hauled in front of Brussels regulators for its monopolistic grip on the search market.
And there are those who will inevitably think this latest move is all about profiteering – about Google spreading its tentacles even further, into markets which really should have nothing to do with a corporation whose roots are in internet search. Like many big companies that expand into other markets simply because they can, does Google risk going against its own corporate mantra, “Don’t be evil”?

Only time will tell. Certainly there should now be visibility into what the historically secretive company is up to. With all the different product lines broken out we’ll be able to see exactly where Google is trying to take all our futures.

But whether it succeeds in its mission “to improve the lives of as many people as we can” remains to be seen.

The announcement didn’t do any harm for Google’s share price, though. It rose 7 per cent in after hours trading, adding a cool $26bn to its market value.

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