Alphabet is creating a new holding company called XXVI Holdings, which will legally separate Google from other business units such as those focusing on self-driving cars, and medical device and data – the reason Alphabet was formed in the first place.
“As a result of the corporate reorganisation, Alphabet and Google will be able to operate in a more efficient, economical, and transparent manner, allowing the companies to concentrate on their revenue generating activities,” the company said in a filing with the US Federal Communications Commission.
The other units, called Other Bets, are now subsidiaries of Alphabet on the same legal footing as Google. The new holding company will own equity of each business unit, including Google.
Other Bets covers a wide range of initiatives including Nest, driverless cars, smart cities, health initiatives, fibre networks, drones and balloons.
Google co-founder Larry Page announced Alphabet in August 2015 to manage its established businesses alongside separate companies for its other, less profitable activities, but technically those units were still subsidiaries of Google.
Another element of the reorganisation involves Google changing from a corporation to a limited liability company.
Bloomberg quoted Dana Hobart, a litigator at Buchalter law firm in Los Angeles, as saying the changes: “allows the parent company to limit the exposure of the various obligations of the LLCs. For example, if one of the LLCs has its own debt, only that LLC will end up being responsible for payment of that debt.”
Gina Weakley Johnson, an Alphabet company representative, told Bloomberg: “We’re updating our corporate structure to implement the changes we announced with the creation of Alphabet in 2015.” She added the process is more of a legal formality.
XXVI is the number of letters in the alphabet expressed in Roman numerals, the report said.