Alphabet Inc., the parent company of Google, is a publicly traded company, meaning it’s owned by its shareholders. These include institutional investors, retail investors, and company insiders. While institutional investors hold a large portion of Alphabet’s shares, the founders, Larry Page and Sergey Brin, maintain control through a unique share structure.
Alphabet has a triple-class stock structure: Class A, Class B, and Class C. Class A shares, available to the public, have one vote per share. Class C shares, also publicly traded, have no voting rights. The key is Class B shares, held exclusively by insiders like Page and Brin. These special shares carry 10 votes each, giving the founders majority voting power and firm control over Alphabet’s direction. Let’s explore how this works.
Early Days and the Rise of Google
Larry Page and Sergey Brin, the minds behind Google, laid the foundation for one of the most influential technology companies in the world. In 1998 that was true of both of them as Ph.D. Students at Stanford University. That’s when they created a new kind of search engine known as “Backrub.
This tool sorts the pages by following their backlinks. It provides a powerful new model for imposing some order on the Wild West internet of the 90s. A year later, in 1997, they renamed the project Google. This whimsical decision alluded to the word “googol,” emphasizing their mission to organize a truly astronomical quantity of data.
Their engineering genius and entrepreneurial ambition transformed an academic experiment into a world-changing enterprise. Funding was key to giving Google the early growth spurt that propelled it into the stratosphere. Venture capitalists John Doerr and Ram Shriram saw the promise and provided crucial financial backing.
Shriram, a founding board member, gave the organization important strategic guidance. In the process, Doerr’s investment helped launch Google’s meteoric rise in its early years. These investments gave Page and Brin the resources to greatly improve their search algorithm.
Innovation, Page explained, required a “safe harbor,” which is how he referred to the moonshot factory at the 2013 Google I/O conference. We all know that part of Google’s rapid rise was due to its groundbreaking search engine technology. Unlike other search engines of the day, it provided users with highly accurate, relevant results, completely changing the way people found information online.
This new innovation created new expectations for the whole internet and what was possible. Legacy products like Search, YouTube, and Android still bring in the majority of revenue, with Search still powering Alphabet’s bottom line.
The Birth of Alphabet Inc.
In 2015, Alphabet Inc. The day Google went public was a transformative day for Google and all its other incubated projects. This far-reaching reorganization strategy was officially unveiled by Google’s cofounders, Larry Page and Sergey Brin, on August 10, 2015. This decision was not arbitrary. It was a tactical stroke of genius, much like Warren Buffett’s investment strategy at Berkshire Hathaway.
The purpose was to form Alphabet as a holding company. This new structure would indeed bring Google and all its subsidiaries together under one roof. This provided each business with more leeway to operate independently while still enjoying the boons of a centralized corporate overseer in the form of the parent company.
One major rationale behind the formation of Alphabet was to allow for better management of Google’s increasingly varied and expanding hodgepodge of businesses. Unlike in 2015, Google has more than doubled its sphere of influence. It is now pursuing bold new frontiers in artificial intelligence, self-driving cars, and healthcare.
By restructuring, Alphabet provided these units with the autonomy to innovate and grow, without being tied to Google’s core operations. This structural separation allowed for clearer operations overall and encouraged a more focused mentality for each new subsidiary.
Financial reporting was made more transparent under Alphabet as well. Investors were able to view more transparent financial statements for each business unit, which added to accountability and trust. This change delivered a new level of governance to stakeholders. They received a much better picture of how each sector of the company affected their collective success.
Larry Page and Sergey Brin maintained control of Alphabet. Though Larry only owns 6.1% of the shares, this gives him enough power to keep the company true to their vision.
Share Classes and Voting Power
Alphabet’s share structure is divided into three classes: Class A, Class B, and Class C. Class A shares are largely held by the general public and provide one vote per share. This very simple structure has enabled ordinary Americans to have true power over corporate governance issues.
Class B shares are held for the founders and essential executives. Each share has 10 votes, which has allowed them to maintain significant control over the company’s direction. Class C shares, frequently issued to employees as part of compensation or sold to generate capital, lack voting rights. This structure makes it easy to point to Larry Page and Sergey Brin’s dominance and claim that they have a long-term plan to retain control indefinitely. Simultaneously, it makes public investment possible.
Currently, voting power is extremely concentrated in the hands of the founders. Larry and Sergey together own 51% of the voting power, thanks in large part to their Class B shares. That power gives them the ability to direct Alphabet’s long-term strategy without bowing to short-term market forces.
For example, they can sell up to 50% of their Class C shares without reducing their voting power. Even if their voting power drops below 50% of all voting shares, they still have enormous influence. They can easily mobilize other shareholders to support their actions. This unusual structure creates stability and continuity in leadership.
Class A shareholders with non-majority voting power do not have the decision-making supremacy Class B holders continue to wield. Though Class C shareholders do not possess voting rights, they are still rewarded with financial returns. This hierarchy demonstrates to investors that Alphabet is a stable company, helping to instill confidence in the company’s ability to innovate while upholding strong governance practices.
Current Ownership of Alphabet Inc.
Alphabet Inc., the parent company of Google, operates under a three-class share structure that heavily informs its ownership and voting power dynamics. This unusual structure has Class A, Class B, and Class C shares. Each class serves a special purpose in the company’s governance. Below, we explain who the big shareholders are and their stakes.
Alphabet (GOOGL) Class A: Top 10 Stockholders
Class A shares give one vote per share and are mostly held by institutional investors. Here’s a breakdown of the top 10 shareholders:
- Vanguard Group Inc: 8.55% ownership with 499.58 million shares.
- Blackrock Inc.: 7.28% ownership with 425.6 million shares.
- FMR, LLC: 3.87% ownership with 226.32 million shares.
- State Street Corporation: 3.81% ownership with 222.56 million shares.
- Geode Capital Management, LLC: 2.29% ownership with 134.03 million shares.
- Morgan Stanley: 2.11% ownership with 123.13 million shares.
- Norges Bank Investment Management: 1.84% ownership with 107.48 million shares.
- Price (T. Rowe) Associates Inc: 1.56% ownership with 91.06 million shares.
- Bank of America Corporation: 1.26% ownership with 73.54 million shares.
- JP Morgan Chase & Company: 1.09% ownership with 63.67 million shares.
(Source: Yahoo Finance)
Alphabet Class B: Top 3 Stockholders
Class B shares are currently held only by insiders and provide ten votes each. The top three shareholders are:
- Larry Page: 44.9% ownership with 26.7% voting power
- Sergey Brin: 41.9% ownership with 25% voting power
- L. John Doerr: 2.6% ownership with 1.6% voting power
(Source: Alphabet Notice of 2024 Annual Meeting of Stockholders and Proxy Statement)
Larry Page and Sergey Brin directly control 51.7% of voting power, allowing them to continue to chart Alphabet’s strategic direction. This governance structure protects their long-term vision, keeping it ingrained in the decision-making process—even through potential mergers or acquisitions.
L. John Doerr is an engineer, venture capitalist, and the chair of Kleiner Perkins. He was an early investor in Google and currently serves on its board of directors.
Alphabet (GOOG) Class C: Top 10 Stockholders
Class C shares have no voting power, which makes them attractive to investors who want a financial return without a say on governance issues. The top 10 holders include:
- Vanguard Group Inc: 7.37% ownership with 407.83 million shares.
- Blackrock Inc.: 6.45% ownership with 357.04 million shares.
- State Street Corporation: 3.36% ownership with 185.92 million shares.
- FMR, LLC: 2.07% ownership with 114.8 million shares.
- Geode Capital Management, LLC: 1.87% ownership with 103.56 million shares.
- JP Morgan Chase & Company: 1.71% ownership with 94.79 million shares.
- Capital International Investors: 1.54% ownership with 85.48 million shares.
- Price (T. Rowe) Associates Inc: 1.49% ownership with 82.34 million shares.
- Morgan Stanley: 1.34% ownership with 74.4 million shares.
- Northern Trust Corporation: 0.89% ownership with 49.18 million shares.
(Source: Yahoo Finance)
Implications of Ownership Patterns
Alphabet’s ownership structure balances stability and growth. The dominance of institutional investors fosters robust corporate governance, while insiders’ control through Class B shares ensures alignment with long-term goals.
This concentration of power can limit external accountability. For shareholders, understanding these dynamics is key to evaluating their influence on Alphabet’s strategic decisions.
How Owners Acquired Their Shares
Unlike Alphabet’s ownership, which is held largely by diverse individuals and institutional investors, owners of FANG stocks acquired shares in different ways. One obvious way is via the public markets, where shares were made available to the public through Google’s IPO in 2004. This IPO provided a rare, albeit temporary, opportunity for early investors and the public to gain exposure to the company’s growth.
Eventually, the vast majority of existing shareholders bought their stakes on the secondary market, where shares are traded back and forth between investors. This daily trading activity provides investors with the liquidity and flexibility they seek when trading shares of a company like Alphabet.
For all of the above key figures at Alphabet, stock options and equity awards have been a major driver. Executives and employees frequently get these as part of their pay packages. This focuses their interests on creating long-term value for the company.
For example, Larry Page and Sergey Brin, the co-founders of Google now known as Alphabet, control enormous shares, a function of their creation of the company and ongoing control. Executives, like L. John Doerr, who owns 24,290,420 shares (0.2% of Alphabet), are made wealthy through advantageous equity distributions. These shares are more than just ownership — they serve to incentivize long-term commitment and performance.
Acquisitions and mergers are other factors that affect share distribution. When Alphabet buys another company, for example, it can use the new shares as currency for the transaction. This process not only brings the acquired entity’s stakeholders into Alphabet’s ownership structure, further diversifying its shareholder base but often provides Alphabet with liquidity.
For example, early investors like K. Ram Shriram, with 2,080,740 shares (0.02% stake), often gain their positions through early funding rounds that precede such corporate milestones.
Conclusion
With that, Alphabet Inc. took its place as one of the world’s most powerful companies. Its unusual ownership structure and the dreams of its founders have been integral to its success. Larry Page and Sergey Brin maintain extreme control through their Class B shares. This helps to keep the company focused on delivering against its long-term goal. Alphabet’s growth is primarily driven by institutional investors and individual shareholders. Their trust and interest are a testament to the larger market’s confidence in the company.
Understanding who currently owns Alphabet helps us understand how decisions are made. This realization goes a long way in explaining why their business model is thriving. Alphabet’s influence is expected to increase, determining the future of tech, business, and innovation.
Frequently Asked Questions
Who currently owns Alphabet Inc.?
Alphabet Inc. is owned by its shareholders. The two largest individual shareholders are co-founders Larry Page and Sergey Brin. Vanguard Group and BlackRock, both known as “passive” institutional investors, are among the largest shareholders.
What is Alphabet Inc.?
As you may know, Alphabet Inc. Is the parent company of Google and many other companies under their Alphabet Inc. It was created in 2015 as a way to reorganize Google’s rapidly expanding collection of companies and initiatives.
How do Larry Page and Sergey Brin maintain control of Alphabet?
Larry Page and Sergey Brin currently own Alphabet through special Class B shares. These special shares entitle them to have 10 votes for each share they own compared to Class A shares, which only have 1 vote per share.
What are Alphabet’s share classes?
Alphabet has three share classes: Class A (GOOGL) with 1 vote per share, Class B with 10 votes per share (owned by insiders), and Class C (GOOG) with no voting rights.
How did Alphabet Inc. start?
Alphabet Inc., the parent company of Google, was formed in 2015 amid Google’s corporate restructuring. The structure was intended to distance Google’s core advertising business from its moonshot projects and subsidiaries.
How do institutional investors acquire Alphabet shares?
Institutional investors purchase Alphabet shares on the stock market. They usually buy Class A (GOOGL) or Class C (GOOG) shares, which are traded publicly.
Why did Google create Alphabet Inc.?
Google formed Alphabet Inc. To make itself more transparent and to let its more experimental projects run on their own. The move allowed Google to double down on its core business while encouraging innovation.
