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I wonder if part of this is to make it easier to kill the side businesses if they fail, since these ventures are inherently very risky, and require people with very different skills than normal at Google. Say 1000 people are working on Calico, but it ultimately fails, and there isn't a natural spot for them in Google anymore. If they were all Google employees, this turns into "massive layoffs at Google." Now it's just "Alphabet folds Calico business", which sounds less bad (and possibly even makes layoffs easier? Don't know, IANAL).

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