Google Founders Turn To Pichai—Again

Google executives engage in a game of musical chairs as the company faces new regulatory scrutiny.

Back in 2015, Alphabet was created as the parent company of Google and an assortment of other companies, some in industries not yet in existence. Google co-founders Larry Page and Sergey Brin stepped away from its day-to-day operations, handing its chief executive reins to Sundar Pichai and becoming CEO and president, respectively, of the new corporate parent. Four years later, Page and Brin have again stepped aside, this time putting Pichai in charge of Alphabet.

Pichai made his mark with Google’s toolbar, the Chrome browser and integration of the Android mobile phone operating system with Google. With so many of Google’s big revenue streams attributable to Pichai, some fear he will cut funding for Alphabet’s so far less profitable bets in industries ranging from autonomous driving and logistics to remote internet connectivity and health care—particularly if legislation on data privacy deals a blow to advertising revenue. The company dropped $25 billion each on research and development and capital expenditure in 2019. Still, Pichai will have plenty of cash to play with.

“It’s foolish to link Google’s investments—of which so-called moonshots get far too much attention, as a tiny minority of spending—with growth in advertising revenue,” says Richard Kramer, founder of Arete Research. “Google has $117 billion of cash and should generate $50 billion of operating cash flow in 2019. The R & D plans for 2020 and beyond are not set off short-term, policy-driven changes in the ads market.”

Pichai’s biggest challenges may be increased scrutiny from regulators on both sides of the Atlantic over privacy and antitrust matters, says Kramer. But even these are unlikely to prove a distraction for the new CEO. “Google has an extensive legal team handling everything from lobbying, to policy responses, to game-theory exercises on how legislation might affect them and trying to influence it,” as with the California Consumer Privacy Act, Kramer argues. “I don’t think these matters will fall into Sundar’s lap.” Moreover, he notes, Page and Brin continue to control the majority of voting shares.