This reorganization makes no difference on the financials. The release explicitly stated the company is trading at the conglomerate level.
It's not that one-dimensional . Their company does have resources that enable them to do things you and others cannot do.
You would be right if you owned a controlling interest, but you don't. Because you don't, all the profits of the money-making businesses go where Larry and Sergey want them to go. That's not (necessarily) going to be your pockets. If you owned a controlling interest, you could throw them out if you're unhappy with their performance as capital allocators, but you don't and you can't. So those profits are worth little or nothing to you, both now and in the future, because you aren't entitled to receive them.
You invest in a company assuming it will increase its value over the time you hold your fraction of ownership. Parent isn't saying you're entitled to dividends, but was observing that the decision to buy Alphabet stock will likely mostly be made on the expectation of the money-making businesses continuing to grow, and only minor-ly on the hope that one or more of the ventures takes off and significantly increase company value.
Perhaps I'm reading it wrong but I didn't see an expectation of dividends in the parent's comment.
a) Neither executive nor any member of the board has any concept of fiduciary duty.
b) They can keep any mismanagement out of audited financial statements.
By the way - who is inheriting the piles of money accumulated in the tax heavens? I think that is another elephant in the room. The GoogleX+Fiber+... is obviously a money hungry black hole, so would they be able now to redirect/invest this money from abroad straight into hat loss generating business without incurring the taxes?
Going forward, this re-organization may very well allow capital allocation to be done at various legal entities a-la project or structured finance. That way, the risk/return of the various projects can be traded on more efficiently to the benefit of both investors and google/alphabet shareholders.
This is relevant in the larger context for asset intensive, long-time maturity investment areas --like fiber, self driving cars, etc -- that have fundamentally different economics than the core business (search/ads/youtube etc).
How would this make any difference for the costing of projects (or businesses, now)? In terms of risks and returns. Its not like new businesses under Alphabet will be boostrapped, they'll still be the same drain/boon on resources that they always were.
The Google guys are smart. You don't do something like this without a long term strategic aim.
> There is no strategy. The thought of Google having a central product management strategy -- and successfully executing it across many teams -- is hilarious to people who work there. It's chaos that outsiders try to read into.
This is a consequence of bad internal economics and incentives. Google PMs and engineers are incentivized to create new products and ship them by quarterly deadlines (perf/promo cycles) rather than align their teams towards a cohesive user experience. Thinking this way would occasionally cause teams to, gasp, not build a product they wanted to build. Everyone needs to ship something, ideally something new. After all, you don't get promoted for deciding not to build something. I've seen awful products/implementations go out the door and get killed or reimplemented soon thereafter. And people still list these as "achievements" on promotion packets (and they get promoted despite the product failing!).
The company is kind of trying to address this by changing promotion criteria, but it's culturally ingrained and won't change for some time.
In the short term, it doesn't. But it may be preparation for something in the longer term that does.