Alphabet is the corporate behemoth Google turned itself into earlier this year so it could have more freedom to experiment with businesses unrelated to the Web without facing pressure from shareholders to monetize the many experiments. (Google itself became a wholly-owned Alphabet subsidiary during this shakeup.)
The self-driving cars would join Verily, the longevity-focused Calico, and YouTube as Alphabet’s standalone companies. These companies will be expected to experiment with new ideas like startups while conducting themselves like real businesses that can’t rely on venture capitalists to help keep them afloat.
Such a move could motivate the self-driving car division to test a ride-hailing service in the cities where its vehicles are allowed to operate. Along with the news about the division’s looming independence, Bloomberg Business also reported that such a service could debut in cities like Austin and San Francisco.
A service like that would put Google in competition with Uber, which also plans to replace drivers with self-driving cars. That could be weird: Google Ventures invested in Uber, and even though it’s technically separate from Google proper, it would still seem like the firm was competing with a member of its portfolio.
Making the self-driving car division separate from Google could help reduce the awkwardness. It would also make it easier to trust the vehicles not to gather personal information to feed into Google’s advertising network, give the division more freedom, and let Alphabet expand its growing empire of small businesses.
So I suppose the surprise isn’t that Alphabet would spin off this division and separate it from Google. That’s why the restructuring occurred in the first place: To allow Google’s founders to experiment with new ideas while allowing Google to focus on its strengths. It’s more surprising that the split has taken this long.