Google CEO replacement is a solution in search of a problem



A man walks past a Google logo. Photo: VCG

The reshuffle of chief executives at Google and its parent Alphabet is something of a solution in search of a problem. Sundar Pichai, who runs the search engine, will now also lead the $890 billion Alphabet, replacing Larry Page. Page’s fellow co-founder Sergey Brin will step back too, according to Tuesday’s announcement. But an overriding reason for the change is elusive.

Establishing Alphabet as a holding company in 2015 was a head-scratcher anyway. The idea was to have various units – from Google to self-driving division Waymo – operate independently. Page became CEO of the parent firm while Brin became president and Pichai was put in charge at Google.

Part of the rationale was to allow Alphabet’s so-called “other bets” to flourish. But they were really the co-founders’ pet projects, and their revenue was and remains a fraction of Google’s advertising machine which includes YouTube. In the third quarter, non-Google sales amounted to just 0.3 percent of Alphabet’s total $40.5 billion.

Perhaps the partial reversal is a recognition that the other bets haven’t yet taken off – and the fact that Brin and Page were already taking a back seat, although they retain a lot of influence through their super-voting shares. Their willingness to cede to Pichai, just like their acceptance of Eric Schmidt as adult supervision earlier in their company’s life, is also sensible.

Alphabet said the move simplifies the management structure. It certainly reflects reality: Pichai is already the most high-profile public face of the company, a role that will become increasingly important amid regulatory scrutiny in Washington and Brussels. He testified before Congress a year ago.

The shift will probably spare the two co-founders any future demands to show up in person. It also frees them to focus more on other projects both within and outside Alphabet. For example, Page is a backer of space-mining firm Planetary Resources.

As for Pichai, he gets a promotion and will now explicitly run the world’s third-most valuable public company. There’s a lot to be said for succession steps that elicit little more than a shrug from investors.

The author is Gina Chon, Reuters Breakingviews columnist. The article was first published on Reuters Breakingviews. [email protected]