Google’s transformation has captured headlines and imaginations this week. The creation of the Alphabet Corporation may completely reshape the tech market and provide rapid growth for consumers and investors. The new corporation, intended to foster innovation, may wind up having other positive effects for the internet giant.
Google has been mired in multiple European antitrust cases. The continent’s courts have challenged the company, claiming that it is an unfair competitor. In the two existing cases, the company has been accused of forcing its position as a dominant search engine and using Android to favor its own apps. The creation of the new umbrella corporation can allow Google to sidestep some of the accusations leveled against it. The creation of the new corporation will allow Google to shuffle its operations, including its cell phone operations.
By being able to bring Android as a child company of Umbrella, rather than a part of Google, the move follows recommendation of the European Parliament. According to the Business Insider, the EU Parliament held a non-binding vote that asked the company to split its search engine business from its other operations. It is unclear if Android will fall under Google’s domain or Alphabet’s, but the new structure is more flexible and in line with the EU’s demands.
Considering that the EU is considering fines on Google up to $5 billion, the moves could not come sooner. The shift allows for Alphabet’s new Android and search functions to be separate, creating a wall of protection against European regulators. Furthermore, as Google or Alphabet begins to shift its focus, the fervor of European challenges may subside.
The immediate charges from the EU may not go away immediately, but it is clear that Google is acting craftily in the face of pressure after one of their employees let the cat out of the bag that Google has the ability to except certain websites it favors from the deleterious effects of its filtering algorithms such as Panda and Penguin. Google’s argument in that case was that it does not white-list sites. In any event, its ability to transform and adapt has been legendary already, especially over the last decade. The company’s leadership understands that its competitors will attempt to manipulate governments into future antitrust cases and is taking the best possible case in trying to avoid future issues.
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