I can't recall this sort of thing happening in my lifetime, so it will be really interesting to see how this plays out. I also wonder how this would be treated if Google didn't have the crazy corporate structure they have now (where public shares are essentially non-equity and non-voting).
Edit: I am reasonably certain this is a tax and liability optimization strategy. It allows their more risky units to operate with separate liability from their cash cow.
Edit 2: I'm actually surprised the stock value hasn't tanked because most of the future potential of Google just got moved outside of the company. How much of Google's future value was based on X? I would say a non-trivial amount of the stock price is the anticipation of future profits, which are now no longer a part of the company the stock is intended to index.
Edit 3: Disregard Edit 2, I misread the release the second time through and assumed X was not part of the company :).
Berkshire is composed of pre-existing businesses that were themselves successful before being purchased. They are not experimental ventures that need to be subsidized. It is exactly the opposite: money is plowed into the strongest businesses. They each generate excess cash, and it is easier to reinvest that cash in some places than others. The conglomerate structure makes it possible to put the cash where it gets the best returns without having to pay taxes or transaction fees.
Alphabet has none of these properties, except the ability to allocate capital tax-free, but they already had that as Google.
They may benefit from the firehose, but were already self-sufficient without it.
That’s in stark contrast to the Google/Alphabet model, where there’s no way driverless cars could exist independent of the adwords firehose.
It’s waaaay more speculative. On the order of VC investing. Rather than Berkshire’s value investing.
It’ll be interesting to see how this plays out.
About the only thing this changes is that ex-Google is now explicitly acknowledging to the public markets what everyone already knew: it's a conglomerate, only unlike other conglomerates, it has only a single viable business.
they did nothing to create the algorithm, what right do they have to whine?
The price of Google's stock is based on forward-looking prospects, not on current metrics.