Alphabet Inc., the umbrella organization encompassing Google, is a global conglomerate that has revolutionized the world by organizing information and making it universally accessible and beneficial. The company’s array of products, from Google Search to Google Maps, Gmail, and Google Cloud, are all designed to address specific challenges that individuals encounter daily. Whether it’s sourcing information online, navigating unfamiliar terrain, communicating with others, or securely storing data, Alphabet’s products offer solutions that millions of people depend on every day.

The Evolution of Alphabet Inc.

This Knowledge Leader’s story begins with two Stanford University students, Larry Page and Sergey Brin, who embarked on a project to create a search engine in 1996. Called BackRub, for its unique ability to analyze the “back links” pointing to a given website, the project quickly outgrew the university’s servers, prompting the duo to seek a new name and a new home for their creation. The name “Google” was chosen as a play on the mathematical term “googol,” representing the number 1 followed by 100 zeros. This name reflected the fledgling company’s mission to organize the vast amount of information available on the internet.

Google’s early successes were remarkable. By the end of 1998, the company had already indexed 60 million pages. Google’s user-friendly design and superior search results quickly made it a favorite among internet users, and by 2000, it was the world’s largest search engine. The company’s growth continued at a rapid pace, and in 2004, Google went public, raising $1.67 billion and establishing itself as one of the world’s most valuable companies. However, Page and Brin were not content to rest on their laurels. They continued to innovate, introducing new products and services like Google Maps, Google Earth, and the Android operating system.

In 2015, in a move to reflect the company’s evolving business structure and broader focus, Google restructured and became Alphabet Inc. The new structure allowed for more management scale, as each business could operate independently within Alphabet. Today, Alphabet Inc. is a multinational conglomerate that includes more than a dozen companies, including Google, YouTube, and Waymo.

The Genesis of Google’s Search Engine

In the realm of technological innovations, few have had as profound an impact as Google’s search engine. Google’s search engine was a significant technological breakthrough because it introduced a new way of indexing web pages, known as PageRank. Unlike previous search engines that ranked results based on the number of times the search terms appeared on the page, PageRank determined a website’s relevance by the number of pages, and the importance of those pages, that linked back to the original site. This innovative approach provided more accurate and relevant search results, which was a game-changer in the industry.

The impact of Google’s search engine on a global scale is immeasurable. It has democratized access to information, making it possible for anyone with an internet connection to learn about virtually any topic. The search engine has become an integral part of our daily lives, influencing how we work, study, shop, and interact with the world.

Moreover, Google’s search engine transformed the internet industry, setting new standards for search engine technology and driving competition, leading to advancements in web browsing, online advertising, and digital marketing. The company’s success also inspired a new generation of tech entrepreneurs, sparking innovation and growth in the tech industry.

Googleplex campus in Mountain View, Calif., credit: Google

Google’s Diverse Product Portfolio

Google’s product portfolio spans various industries, each having a significant impact on the way we live, work, and play.

At the heart of Google’s product line is its search engine. Google’s advertising products, such as Google Ads and Google AdSense, have transformed the advertising industry. These platforms allow businesses of all sizes to reach their target audience effectively, contributing significantly to Google’s revenue.

Google Workspace, formerly known as G Suite, is a suite of cloud-based productivity and collaboration tools. It includes Gmail, Google Drive, Google Docs, Google Sheets, Google Slides, and Google Meet. These tools have made remote work and collaboration easier, especially during the COVID-19 pandemic.

Google’s hardware products include the Google Pixel smartphones, Google Nest smart home devices, and Google Chromebooks. These devices integrate seamlessly with Google’s software and services, providing a cohesive user experience.

Other notable Google products include Google Maps, which has changed the way people navigate; YouTube, the world’s largest video-sharing platform; and Google Cloud, a suite of cloud computing services competing with the likes of Amazon Web Services and Microsoft Azure.

Google’s unique strengths lie in its ability to innovate, its vast data resources, and its commitment to user experience. The company continually invests in research and development, leading to the creation of groundbreaking products. Google leads the industry in several product categories. It dominates the search engine market, with a share of over 90%. In the video-sharing platform category, YouTube stands unrivaled. Google Maps is the go-to navigation tool for many, and Google’s advertising platforms command a significant share of the online advertising market. Google’s chief competitors vary depending on the product category. In search, its main competitor is Bing. In cloud computing, it competes with Amazon Web Services and Microsoft Azure. In the smartphone market, it faces competition from Apple and Samsung.

Google Pixel 6, credit: Google

Google’s Global Operations and Recognition

With offices in more than 50 countries. Alphabet’s international expansion has been a key driver of its success, allowing it to reach users around the world and tap into diverse markets and talent pools. The firm’s global operations span across North America, Latin America, Europe, Asia Pacific, and Africa & the Middle East. In the United States alone, Google has offices in numerous locations, including its headquarters in Mountain View, California, and other major cities like New York, Austin, and Chicago. The company also has a significant presence in Canada, with offices in Toronto and Montreal. In Latin America, Europe, and the Asia Pacific, Google has established operations in key markets such as Brazil, the United Kingdom, Germany, India, and Australia. In Africa and the Middle East, Google is expanding its footprint, with offices in locations like Dubai and Johannesburg. Global operations allow it to serve a diverse range of market segments. For instance, its search engine and advertising products cater to both individual users and businesses worldwide. Its cloud computing services target businesses of all sizes across various industries. Google’s hardware products, like the Google Pixel smartphones and Google Nest devices, are sold in numerous countries around the world.

Google’s international expansion has not been without challenges. The company has had to navigate different regulatory environments, cultural nuances, and competitive landscapes. However, its ability to adapt and innovate has allowed it to thrive in these diverse markets. As of today, Google employs over 100,000 people worldwide, a testament to its growth and success. The company continues to invest in its global operations, opening new offices and data centers, and forming partnerships with local organizations to drive innovation and growth.

An Engine of Innovation

Research and development (R&D) plays a pivotal role at Google, driving the creation of products and services that impact billions of people worldwide. The firm’s R&D philosophy is centered around advancing the state of the art. Research teams aspire to make discoveries that impact everyone, and core to their approach is sharing their research and tools to fuel progress in the field. Google researchers publish regularly in academic journals, release projects as open source, and apply research to Google products.

In addition, R&D activities span across various domains. For instance, the company is making significant strides in machine intelligence, with projects like “Large language models encode clinical knowledge” and “Symbol tuning improves in-context learning in language models” showing promise. In the field of machine perception, Google is working on projects like “Pic2Word: Mapping pictures to words for zero-shot composed image retrieval” and a recent research paper entitled “Modular Visual Question Answering via Code Generation.”

Google’s commitment to R&D extends beyond its home market. The company’s global reach allows it to tap into diverse talent pools and collaborate with researchers and organizations worldwide. For instance, Google’s research teams in Europe are making significant contributions to the company’s AI initiatives. Google’s attitude toward innovation is one of openness and collaboration. The company believes in sharing its research and tools with the broader scientific community to drive progress in the field. This approach not only accelerates the pace of innovation but also fosters a culture of learning and discovery within the company.

Google Meet, credit: Google

Recent Product Breakthroughs

Google’s commitment to innovation has led to several significant product breakthroughs in the last five years.

Google Quantum Computer: In 2019, Google announced a major breakthrough in quantum computing. The company claimed to have achieved “quantum supremacy” with a 54-qubit processor named “Sycamore,” which performed a calculation in 200 seconds that would take the world’s fastest supercomputer 10,000 years.

Google Duplex: Launched in 2018, Google Duplex is an AI system that can make phone calls on behalf of users to book appointments or make reservations. It uses natural language processing and machine learning to understand context and respond appropriately.

Google Stadia: Introduced in 2019, Google Stadia is a cloud gaming service that allows users to play video games on virtually any screen without the need for a console. It represents a significant shift in the gaming industry, moving away from hardware and towards streaming.

Google Meet: In response to the COVID-19 pandemic and the increased need for remote communication, Google made its premium video conferencing tool, Google Meet, free for everyone in 2020. This move has helped millions of people stay connected during these challenging times.

Google AI Hub: Launched in 2018, Google AI Hub is a one-stop destination for machine learning professionals to find and share resources. It includes a growing repository of plug-and-play machine learning models.

AI Initiatives

Artificial Intelligence (AI) is at the heart of Google’s mission to organize the world’s information and make it universally accessible and useful. Google’s approach to AI is rooted in its commitment to making positive societal impacts. The company’s research teams aspire to make discoveries that benefit people at a large scale.

One of the most notable AI initiatives at Google is Google Duplex, an AI system that can make phone calls on behalf of users to book appointments or make reservations. It uses natural language processing and machine learning to understand context and respond appropriately. Google’s AI initiatives also extend to its cloud computing services. Google Cloud AI provides modern machine learning services, with pre-trained models and a service to generate custom models. It’s designed to help businesses build machine learning models that work on any type of data, of any size. Google’s AI research spans across many domains, including machine intelligence, machine perception, and natural language processing.

Collaborations and Partnerships: The Driving Force of Innovation

Google’s strategic alliances have not only expanded Google’s reach but also fueled its relentless pursuit of innovation. One of the most notable collaborations is with NASA. In 2005, Google partnered with NASA Ames Research Center to build up to 1 million square feet of offices. The collaboration aimed to build world-class, collaborative working environments that promote knowledge sharing and innovation. This partnership has led to advancements in areas such as distributed computing, bio-info-nano convergence, and encouragement of the entrepreneurial space industry.

Another significant partnership is with the Foxconn Technology Group. In 2013, Google acquired Boston Dynamics, a mobile robot company known for BigDog. Its partnership with Foxconn aimed to replace human labor with robots, pushing the boundaries of technology and automation.

Google’s collaboration with the healthcare sector is also worth mentioning. In 2014, Google announced its partnership with pharmaceutical company Novartis to work on smart contact lenses for diabetics. This partnership aimed to leverage Google’s expertise in miniaturized electronics with Novartis’s knowledge in pharmaceuticals and medical devices, creating a unique intersection of healthcare and technology. Moreover, Google’s partnership with the automotive industry, specifically with major car manufacturers like Audi, GM, Honda, and Hyundai, led to the development of the Open Automotive Alliance. This alliance aimed to bring Google’s Android platform to cars, marking a significant step towards the future of connected cars.

Lastly, Google’s collaboration with the education sector, particularly with Khan Academy, has revolutionized the way many perceive education. Google has provided support to Khan Academy, an online platform offering educational videos, to help students worldwide.

 This Knowledge Leader spotlight was generated using our AI engine with a series of prompts custom-developed by Knowledge Leaders Capital and designed to uncover the innovation strategies of companies we consider to be Knowledge Leaders. We have edited it for content, style, and length.

The following sources are examples of sources that may have been consulted in the preparation of this spotlight.

• Alphabet corporate website
• Google corporate websites
• Wikipedia
• Nasa.gov
• Khan Academy website
• The Verge
• Openautoalliance.net
• Novartis corporate website
• Nature.com
• CNET.com
• Gs.statcounter.com
• Business Insider
• Wired.com
• Forbes.com

As of 6/30/23, none of the securities mentioned were held in the Knowledge Leaders Strategy.

The information contained in our “Spotlights” is provided for informational purposes only and should not be regarded as an offer to sell or a solicitation of an offer to buy the securities or products mentioned and is not intended to be investment advice. Knowledge Leaders Capital may deviate from the investments or strategies implementation as discussed in the “Spotlights” and the opinions expressed therein are subject to change at any time for any reason without notice. Knowledge Leaders Capital makes no representations that the contents are appropriate for use in all locations, or that the transactions, securities, products, instruments, or services discussed are available or appropriate for sale or use in all jurisdictions or countries, or by all investors or counterparties. The reader should not assume that companies identified and discussed were or will be profitable.

The Knowledge Leaders investment process uses a proprietary methodology based on academic research. To create an intangible-adjusted financial history, we capitalize intangible investments—including R&D, advertising, brand development and employee training expenses—treating them as a company would tangible investments. Using these intangible-adjusted financial histories, we run each company through a proprietary Knowledge Leader screen. Companies that pass through every level of the screen emerge as Knowledge Leaders.

Past performance or historical trends are not necessarily indicative of future results.

Companies are selected for “Spotlights” based on high levels of innovation activities in their respective industries and illustrate innovation being employed across all sectors and geographies. Spotlight selection is separate from stock selection by the investment team. Spotlights are not necessarily representative of investment opportunities and can be selected regardless of investment performance or inclusion as a KLC holding.