Who Owns Google (Alphabet) and Who Controls It?
Who Owns Google and Who Controls It?
Decades ago, ownership of a listed company was once simple. We counted the number of shares we own and their share of the total number of shares. The resulting percentages determined both shares of capital (and dividends) and voting rights.
Today, Alphabet (Google) and many other companies often have different types of stock with different voting rights. Therefore, defining a company owner has become a bit more complicated. In this article, we will look at the ownership structure of the alphabet (Google). Who owns it and who controls it.
So who owns Google? The top shareholder is Vanguard, with a 6.4% share of the share, followed by Google founders Larry Page (5.7%) and Sergey Brin (5.5%). But thanks to the “super-voted” stock, Larry and Sergey won 51% of the total votes. Therefore, they manage Alphabet Inc.
As you can see from the table above, the founder’s Larry and Sergey are clearly in control. They do not take a majority stake and have a majority vote. Let’s take a closer look at how this can be achieved. Let’s look at the different stock classes of Alphabet Inc. and how they are distributed among shareholders.
Who Owns the Alphabet’s Equity vs. Who Has Voting Power?
Let’s take a second look at the difference between the owner of an Alphabet (Google) equity and the owner of a vote in a more visual way. We have included all shareholders with at least a 5% share in any of Alphabet’s three stock classes.
The main point of the above infographic is that Alphabet’s capital, Larry and Sergey, “only” have a share of 11% but dominate 51% of the votes. This fact makes the voting rights of all other shareholders irrelevant.
If Larry and Sergey agree on something, it happens regardless of what the other shareholders’ opinions are. There is one fictitious situation in which the voting rights of other shareholders can be problematic. That is when Larry and Sergey disagree with something and vote differently.
Different share classes behind the difference between Google owners and voters
We have already mentioned that Alphabet Inc has three classes of shares. These differences are exactly why Lary and Sergey continue to control the company.
Google Alphabet has currently three classes of shares outstanding: (use the table?!!!)
Class A: 1 “normal” share per share. Listed with ticker GOOGL
Class B: 10 “super-voting” shares with 1 vote per share. Not publicly traded and primarily owned by the founder
Class C: Non-voting stock with no voting rights. Listed with Ticker GOOG.
Now let’s take a look at the breakdown of all issued stocks as of December 2018 by stock class. You can check the number of each class for each shareholder.
Owning Class B shares is the key to Larry and Sergey controlling Alphabet (and Google). With only 47 million shares in these shares, the founders can recall the shots as they have 10 times more votes.
For added clarity, the table below shows the same share of total votes.
Now it’s clear how two people, 51% of whom have an 11% share in capital management, can vote. For completeness, we will show the market capitalization of Alphabet by the top shareholders by multiplying the stock price at the end of 2018 by the stock price.
Can Larry or Sergey sell the Alpha Super voting stock to someone else?
Yes, you can and already are doing it slowly, but don’t worry. Class B shares have super-voting rights only if they are in the hands of their original owners. If the original holder sells, the shares will automatically be converted to ordinary Class A shares with one vote per share.
There is one exception to this rule. That is, the original owner of the Class B shares sells them to another original owner or a B Class share. In that case, the Class B stock will retain its super-voting power. For example, Lary Page and Sergey Brin can buy B shares from Erik.
This means that there are no new Class B shareholders.
What If Some of Google’s Founders dies? Who will be in control of the Alphabet?
Similar to selling stock. If one of the founders dies, his stock will automatically be converted to a normal Class A stock. Class B shares cannot be inherited without losing extra voting rights.
If the founders make any provisions, their voting rights may be transferred in the event of a death in another Class B shareholder. If so, the conversion to common stock will not occur immediately and will occur after nine months.
Will Larry and Sergey continue to manage the alphabet throughout their lives?
Currently, two founders of Google own 51% of voting rights. Looking back a few years ago, the trend is clear. The share is gradually decreasing as the founder liquidates a portion of its holdings each year. For example, at the end of 2014, the total voting power was 55%, but now it is 51%. The more money Larry and Sergey need for other projects besides Alphabet, the less likely they are to vote.
