Google took everyone by surprise by announcing the parent company Alphabet. Image Credit: RewittyFeed
Google took everyone by surprise by announcing the parent company Alphabet. Image Credit: RewittyFeed
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Earlier this year, Google took everyone by surprise by announcing the parent company –Alphabet. With this shake up, it created separate subsidiaries for projects that weren’t a core part of Google.

Now, a new report by The Wall Street Journal, reveals that the subsidiaries of Alphabet may now have to pay Google for using its core infrastructure. This will mean subsidiaries like Nest and Google X will have to pay to use the established services of Google.

“Alphabet will charge bet companies based on an estimate of what they would pay to buy the service elsewhere. Another goal is to create financial statements that can be audited for each business, making it easier for them to be spun off or separated from Alphabet in the future, one of the people said,” the report adds.

The subsidiaries now have the freedom to have their own recruiting and also build their own infrastructure. For instance, Nest focusing on making homes smarter reportedly now has its own legal and marketing team and also rents computer services from Google’s rival Amazon.com.

This move is also said to be a way to help appease Wall Street investors. Also, the balance sheet will make it clear to understand how a particular project is functioning. “The arrangement continues the steady drumbeat in recent months of Google trying to show Wall Street it can reign in some portion of its wild costs for areas outside its core online advertising business, and offer a more sustainable roadmap for future innovation,” points out Mashable.