Just in case you didn’t know, Google announced its shuffle into forming an umbrella company called Alphabet. The current Google will then be a subsidiary of Alphabet as will all the current projects/ departments previously under the control of Google.
As you’ll realise, I’m not the most savvy business person, I do try, but in my opinion, I think this is a masterful move and here’s my 3 reasons:
The firm formerly known as Google has, like, a gradzillion bucks sitting in the bank.
And as anyone with a few quid knows, when you have much cash, others want their cut.
Fine Google and, if you win, you could be in for a windful. Apart from making lawyers very rich, a few governmental departments have been sueing Google’s arse for ages.
Moving Google to a child firm cuts down the amount they could lose when fighting these ‘anti-trust’ cases.
A gradzillion bucks in 1 pot makes for a very big pot, which, like the reason above, HMRC, IRC and all the other governmental vulture departments want their greasy hands on it.
Reducing the profit each firm makes will reduce their overall tax bills – yes, I know, I can feel the steam coming out of your ears when you mix taxes and Google in the same sentence but that’s for another day.
There’s more to go around.
Simply put, if one venture is losing money it’ll not affect the others in such a dramatic way.
Worst case scenario, they close that venture down and all other monies are ring-fenced therefore won’t be affected.
So, these are just my uneducated presumptions, no doubt there are many more reasons why a company would go this route, so I welcome your suggestions.