Google once had many smaller projects it was working on, but all of those are now their own company under the Alphabet umbrella. However, unlike before, Alphabet will be keeping a close eye on their spending habits, and making sure they are held accountable for their spending.
Some of the “smaller” companies owned by Alphabet are Google, Google X, Fiber, Nest, Calico, Life Sciences, and more. However, all of these companies now have to pay full price to use each others resources. For example, Nest may want to use Google Cloud Platform, and will have to pay full price just like everyone else.
The main point Alphabet is trying to make is that everyone needs to be fully aware of their spending habits. Also, subsidiaries do not have to use Google and its products, but can if they are the cost effective choice. If not, use someone else.
The only problem would be will this prevent “moonshot” projects? It’s hard to say right now, but we would imagine Alphabet will allow companies like Google X project to take a little extra time before they are held accountable, while a much larger company like Google will have to pay sooner.
The move to do this was made to please Wall Street investors who were worried Alphabet was spending too much money on all these smaller, possibly not profitable, projects. However, any new changes will not be seen until a couple of months from now as Alphabet won’t share any numbers about moonshot projects until next quarter.
Source: WSJ
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