Alphabet Founders Stepping Down and What it Means for the Future

There’s been a lot of talk throughout the tech and digital marketing industries about Google cofounders, Larry Page and Sergey Brin, both stepping down from their management roles. Google’s parent company, Alphabet Inc (NASDAQ: GOOG), which will be led by Sundar Pichai, announced the change in a letter to shareholders on Tuesday.

Despite the change, however, both Page and Brin have stated publicly that they will remain in control of Alphabet.

This isn’t surprising as Page and Brin collectively still own 51% of Alphabet’s voting power. Google confirmed to CNBC on Tuesday that the company’s voting structure was not going to change as part of the leadership change.

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This is an odd situation, however, because Alphabet’s corporate structure had already freed them of a lot of the day to day responsibilities, so I wouldn’t be surprised if there’s more to the story.

Sundar Pichai will be taking over the role of CEO for Alphabet while maintaining his current role as the CEO of Google.

This may be seen as either a positive or a negative, depending on your views on Alphabet and its business practices.

Some, myself included, don’t expect much to change in the near future.

Alphabet is a behemoth. And much like maneuvering an enormous aircraft carrier, a major change in direction for a company of this size requires significant time and effort. With massive subsidiaries including Google, Sidewalk Labs, DoubleClick, and numerous others under Alphabet’s umbrella, a nimble pivot is not realistic. Aside from it not being realistic, it’s generally not advantageous for such a large company to make a major change in direction anyway.

Sundar Pichai and the future of Alphabet

Some others believe that less involvement from the founders will lead to a lack of focus and performance. This often occurs when visionary founders step down, leaving people with a different mindset in charge.

That’s an understandable position, but considering the massive transformation we’ve witnessed under their direct leadership over the last two decades, change is something employees of the company are already comfortable with, from the top down to the bottom.

Alphabet has launched and killed a dizzying number of projects over the years, including several social networks. But throughout it all, they’ve always remained focused on their flagship product—search.

That’s not going to change anytime soon. Search plays a foundational role in their business, and of course, there’s the fact that it also currently accounts for most of their revenue.

That’s an apple cart they don’t want to tip over.

But despite their intense and consistent focus over the last two decades, it hasn’t always been a smooth path.

In 2012, their overzealous attempt to eliminate link building tactics that they deemed to be a violation of their ever-changing guidelines, they destroyed countless businesses. Their Penguin algorithm update completely removed thousands of innocent businesses from the search results. This meant that even if a user had searched for that company by name, they wouldn’t appear in the search results.

In 2019, they rolled out another algorithm update dubbed the Medic update, which had a similar outcome, decimating countless legitimate websites on medical topics.

The collateral damage from both of these updates was both astounding and irresponsible. And there have been several others that while less severe, still had a significant adverse effect on legitimate businesses.

Where I see the potential for tremendous impact—either positive or negative, will be in how the company treats users.

So far, their track record hasn’t been great.

“Don’t be evil” had been part of Google’s corporate code of conduct since 2000. However, when they restructured under the parent company, Alphabet, in 2015, they replaced that motto with “do the right thing.”

Major privacy concerns at Google

While this change may seem benign, the subtle yet significant change was concerning to many.

The “right thing” could be interpreted differently depending on who you ask. The right thing for Alphabet often isn’t the right thing for users, as we’ve seen in their handling of privacy and personal data. And they’ve taken a well-deserved beating over that.

Some examples include:

  • Google’s ‘Project Nightingale’ gathers personal health data on millions of Americans
  • Google says it allows apps from third parties to scan and share data from accounts, according to a letter sent to federal lawmakers.
  • New study finds Google’s Android is sharing even more data than we thought
  • At the Techonomy conference in 2010, Eric Schmidt stated “Show us 14 photos of yourself and we can identify who you are. You think you don’t have 14 photos of yourself on the internet? You’ve got Facebook photos!”
  • After privacy concerns were raised in 2009, Google’s CEO Eric Schmidt declared: “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”

The users are, of course, a top priority because an audience is necessary in order to sell advertising. Alphabet has done quite an effective job at this.

In fact, they reported advertising revenues of $33.9 billion for the third quarter, a 17% increase from $29 billion just one year ago.

But Alphabet’s poor track record on privacy doesn’t end with users. Publishers, however, are just as essential because, without them, Google has literally nothing to provide to users.

Sundar Pichai needs to avoid becoming the next lycos

In an effort to continue evolving in its mission “to organize the world’s information and make it universally accessible and useful,” Google has routinely overstepped its relationship with publishers.

They routinely scrape data from websites and then turn around and cut the publisher out of the equation by presenting the data directly to users. And the examples of Google doing this continue to spread to various new search topics.

With Page and Brin stepping down, this is the perfect opportunity for Sundar Pichai to address the privacy concerns of users, and equally important, the intellectual property concerns of publishers.

If the new leadership fails to do this, Alphabet may soon face a declining market share to privacy-focused competitors like Brave, which competes with Chrome, and DuckDuckGo, which competes with Google.

While that may sound inconceivable at the moment, we need to remember that once upon a time, Google was just a tiny search engine with virtually zero market share.