Alphabet Inc. is a holding company. The company’s segments include Google Services, Google Cloud and Other Bets. Google Services includes products and services such as ads, Android, Chrome, hardware, Google Maps, Google Play, Search, and YouTube. Google Cloud includes Google’s infrastructure and data analytics platforms, collaboration tools, and other services for enterprise customers. Its Google Cloud provides enterprise-ready cloud services, including Google Cloud Platform and Google Workspace. Its Google Cloud Platform enables developers to build, test, and deploy applications on its infrastructure. Its Google Workspace collaboration tools include applications like Gmail, Docs, Drive, Calendar and Meet. Its hardware products include Pixel phones, Chromecast with Google TV and Google Nest Hub smart display. The Other Bets segment is engaged in the sales of Internet and television services, licensing and research and development services. The company is publicly listed on NASDAQ under the ticker “GOOGL” and “GOOG”, with the former being voting shares.
Our considerations
Alphabet is a holding company, meaning that it is a collection of various companies, of which the most important and famous one is Google.
In search, Google is the leading player by a good margin: the brand is, in fact, so powerful that consumers even use the expression “googling” informations as opposed to online searching. There are not a lot of brands that have the luxury of being able to replace the name of the product or service they offer with their own name.
Because of its very business model, Alphabet benefits from scale advantages and the network effect: the more we use their products, the more the company learns from its data, and it leverages on Artificial Intelligence to get exponentially better over time. Obviously, privacy concerns are a key issue on this topic, but it is fair to say that, at least for the majority of users, the benefits deriving from Google’s ecosystem outweighs those concerns. While counter-intuitive, we always have to look to what people are doing rather than just listening to what they are saying, and evidence shows that there is a big engagement with Alphabet and its products. Also, the network effect provides the company an additional source of competitive advantage: indeed, the more videos are uploaded to YouTube, the more viewers are attracted to the platform, creating the incentive for content creators to keep producing more and better contents. Creators and viewers attract each other.
Support authors and subscribe to content
This is premium stuff. Subscribe to read the entire article.
