Alphabet to leave Google investors seeking clarity

Google investors hoping for detailed financial reporting across its range of individual businesses could be disappointed after a major shake-up of its organisational structure was announced.

Investors piled into the search giant’s stock late on Monday causing a 6% spike after Google chief executive Larry Page announced the formation of its new holding company, Alphabet in a blog post which also gave details of how the newly formed enterprise would operate.

The move will see its constituent parts given greater independence and offer investors a clearer window into its smaller companies but not to the degree that some may be hoping for.

“While the investors are saying it’s about transparency, I don’t think Google are going to report at the level of granularity that investors are really hoping for,” said Digital Marketing Institute director Ian Dodson.

“You will get a certain amount of more clarity about where Google are earning and spending their money in terms of their core business in search and YouTube. I don’t think Google will release the type of granularity that people are actually hoping for.”

The real benefit to Google from the organisational rejig, in addition to appeasing investors to some degree, could be pre-empting further antitrust issues that could surface down the line.

Such issues have already surfaced with the EU taking an antitrust case against it earlier this year on the back of complaints involving its online shopping service from Microsoft and a number of smaller firms.

With a suite of complementary businesses and more likely to come on stream, dividing out its separate companies into individual parts could head off future issues.