So Google is now Alphabet. Don’t let the org chart games fool you; the bits of Google that are practical and presumably making money or heavily involved in same (search, advertising, YouTube, Android) are being staffed out to themselves but the founders are running Alphabet, which appears to be composed of moonshots and 100x and buzzwords and things that would make the writers of Silicon Valley on HBO blush to pin that level of preposterous on another person.
But they also used the words “Berkshire Hathaway.” And that’s a name to conjure with, because Warren Buffett’s holding company has become synonymous with long-term investment with big returns. After all, dude is as rich as Bill Gates, supposedly. If Alphabet is expecting to be attractive to investors, the promise of crazy cash in return for your upfront money is certainly what you want to sell. But I’m looking at this and seeing something else altogether.
Look at television, for instance. Right now, ESPN is the only thing going that really makes you have to invest in a cable bill. Because otherwise, you could pay for subscriptions to Netflix, Hulu, HBO GO and Amazon Prime, and you’d have pretty much most of the things you’d have gotten from your cable subscription ten years ago aside from ESPN. Things like House of Cards and Orange Is The New Black made Netflix the new HBO, and now the old HBO is not unlike Netflix with the advent of HBO Now. Plus YouTube is the new hotness for the kids, and if you don’t believe me look at how Hannah Hart has gone in four years from making drunk cooking videos for her friend back East to hosting a Doctor Who marathon on BBC America and starring in a movie you can buy on iTunes and a revived TV series that will be…on the web.
Now.
Google owns YouTube. What’s to prevent Alphabet from taking a stake, say 30% or so, in a publicly traded Netflix or Hulu? Or for that matter Amazon? Or buying big into Time-Warner, which impacts HBO, or into Disney which affects not only ESPN but the entire Star Wars and Marvel franchises? Or for that matter, into Apple? Or Microsoft? Or any other publicly held company whose interests might intersect or compete with Google?
Alphabet is the instrument by which Larry and Sergey can get a piece of everything and anything. You don’t have to sell out to Google anymore. Alphabet can just buy a chunk of whoever you do sell out to. And given the shoddy nature of securities regulation in this country and the limits of what can be done abroad, it’s not difficult to see them getting away with it.
Google might have been getting too big to innovate, but Alphabet might be too big to let live.