“Dominance as such is not a problem,” said the EU Commissioner in charge of competition policy, Margrethe Vestager,“However, dominant companies have a responsibility not to abuse their powerful market position.” Source: Ars Technica
Google has been accused that it had breached antitrust rules by diverting traffic from rivals in order to favour its in-house services. If they are found guilty, Google stands to lose up to 10% of its annual sales and restructure its business model.
Similarly, Microsoft lost a similar lawsuit in 2007 and had to pay $670 million in fines and change its Windows package to make it more compatible with other systems. In 2009, Intel was fined $1.45 billion for stifling competition and limiting customers’ options by giving several computer manufacturers rebates in exchange for exclusively purchasing the company’s microchips.
However, why not just restructure its business model BEFORE the case outcome? By making Google, a subsidiary of its now-parent company, Alphabet, Google would be effectively shielded from lawsuits stemming from an anti-trust nature. Its other divisions, eCommerce, X-labs, Ventures, NEST et al will all be separate subsidiaries, and it can no longer face similar sort of anti-trust lawsuits, since Google (the search engine, ad revenue, and mobile cash cow) is now a separate entity from the other companies it had previously acquired or invested in.
But one confusing thing about this new restructuring is the Google stock that trades under GOOG and GOOGL. Not surprisingly, exactly a year before the EU Commission's anti-trust lawsuit against Google, it split its stock from GOOG to both GOOG (class C) and GOOGL (class A) shares.
However, GOOG stock symbol is now representative of Alphabet Inc, and not Google Inc.
Bloomberg has to say about the restructuring of Google into Alphabet: "For anyone who owns shares of Google now, no action is required. The stock will automatically convert into Alphabet shares that represent stakes in the same collection of companies that exists today, just arranged differently. The change won’t require a shareholder vote or create any extra taxes.
“The conversion will occur automatically without an exchange of stock certificates,” according to a regulatory filing. “Stock certificates previously representing shares of a class of Google stock will represent the same number of shares of the corresponding class of Alphabet stock.”