14 TheEconomistAugust 1st 2020
1T
o get a good look at Google, climb a bar-
ren hill in front of the online giant’s Sil-
icon Valley headquarters—or rather, both
of them. To the right lies the old hq, a
clump of low-slung office buildings ringed
by dozens of similar boxes. To the left a
brand-new corporate centre is rising. From
outside it resembles an oversized circus
tent, but the inside is still undetermined:
pillars, wooden panelling and hardly any
walls. The bare-bones structure is meant to
provide architectural flexibility. This will
come in handy in a post-pandemic world
in which offices will look quite different.
“We’ll get a chance to reimagine it,” says
Sundar Pichai, the boss of both Google and
its parent company, Alphabet. And just as
the bricks-and-mortar structure is chang-
ing, the organisation is in transition, too.
When Mr Pichai took over as chief exec-
utive of Google in August 2015, after it be-
came the core of the newly formed Alpha-
bet, the online-search-and-advertisingbusiness had annual revenues of $66bn
and net income of $14bn. By the time Ser-
gey Brin and Larry Page, Google’s founders,
handed him the reins of Google’s parent
company last December his division was
raking in profits of $34bn on sales of
$161bn—and Alphabet was worth almost
twice as much as four years earlier.
This enviable track record justifies Mr
Pichai’s rich compensation package over
several years, of $2m annual salary plus
$240m in shares and stock options (de-
pending on performance targets). It would
also justify a degree of complacency. Far
from it. Mr Pichai realises he inherited an
organisation in the middle of momentous
change. That is not just because of the
founders’ departure or the move next year
into the new hq, but for a deeper reason. As
Alphabet has grown—more than 4bn peo-
ple are thought to use at least one of its pro-
ducts or services—so has the tug of eco-
nomic and political forces on it.From the outside, lawmakers and trust-
busters are pressing it for explanations
over alleged abuses of its market domi-
nance in online-search-and-advertising
technology. On July 29th Mr Pichai joined
his opposite numbers at Amazon, Apple
and Facebook to field angry questions from
a congressional committee investigating
Big Tech’s alleged anticompetitive prac-
tices (see United States section). On the in-
side, Google’s core businesses are matur-
ing. After The Economist went to press
Alphabet was expected to report the first
year-on-year decline in quarterly revenues
in its history, hurt by the pandemic-in-
duced tightening of marketing budgets.
And the company’s famously freewheeling
culture is becoming harder to sustain.
Mr Pichai’s foremost challenge is to pre-
vent Alphabet from becoming what Mr
Brin and Mr Page were so bent on avoid-
ing—a “conventional company” that dies a
slow death from lack of innovation and de-
clining growth. The task is as delicate as
the technology giant is gargantuan.
Today Alphabet is a conglomerate of
businesses that sometimes appear to have
little in common—a corporate planetary
system or Googleverse, if you will. Com-
mercially, its centre of gravity is Google it-
self, and particularly its online-advertising
business. This generates 83% of the group’s
revenue and all its profits. It is a constella-Google grows up
MOUNTAIN VIEW
As the computing conglomerate has got bigger, so too have its problemsBriefing Alphabet