Google, which is now known as Alphabet Inc., is actually a holding company that trades under two different ticker symbols: NASDAQ: GOOGL and GOOG. Alphabet is similar in structure to Warren Buffett’s Berkshire Hathaway (NYSE: BRK.B).
Google’s management team radically reorganized the company in the Summer of 2015 by creating the Alphabet holding company. Such a move could make Google very vulnerable to changing political, economic, social, legal, technological and environmental (PESTLE) conditions.
- There is much widespread criticism that Google is a monopoly. This has led to antitrust action, particularly around Europe. There have been calls for Google to be broken up or to make changes to the way it conducts searches.
- There has been much criticism that Google has too much control over the flow of information. Social scientists including Robert Epstein and Ronald E. Robertson have even made the claim that Google’s search results could influence the outcome of elections. This could lead to calls for nationalization or stricter government oversight of Google.
- Alphabet has accumulated a huge amount of cash, which makes it vulnerable to inflation. Should a sudden drop in the value of a currency occur then this could reduce the company’s value. A sudden drop in Alphabet’s high stock price could hurt the company by reducing its market capitalization.
- A decline in the use of traditional desktop and laptop computers, which historically have been the most popular means of accessing Google. Tech Crunch reported that more searches were done from mobile devices than computers for the first time during the summer of 2015.
- Growing use of social media solutions such as Facebook and WhatsApp for activities traditionally done on the Internet. This includes search, streaming video, shopping and money transfer.
- There is a fast growing use of mobile devices to access the Internet. Some of these devices, including Apple products, have proprietary search engines that compete with Google.
- Some competitors; notably Amazon and Microsoft, have devised search algorithms that are as popular and effective as Google’s. Amazon has been able to dominate shopping research with its solution. There is a strong possibility that a competitor could devise a better search solution than Google’s at some point.
- Google continues to enter heavily regulated fields such as finance, insurance, telecommunications and automobiles. This could place severe restrictions on its operations.
- Liabilities and legal costs could increase as Google enters fields like insurance and experiments with delivery services.
- Google’s business model is dependent on data centers and other Internet infrastructure that use large amounts of electricity. Efforts to control global warming by encouraging the use of costlier green energy sources to produce electricity could raise Alphabet’s operating costs. At some point in time, Google might not be able to offer free services as it has in the past.