Dive Brief:
- Alphabet is considering a shared services approach to make its subsidiaries more accountable for spending.
- Under the proposed system, “bet” companies such as Google X, Google Fiber and Google Life Sciences will be charged for using corporate services.
- Alphabet says it’s an effort to make its speculative projects self-sustaining.
Dive Insight:
Under the proposal, subsidiaries would pay for services such as computing, recruiting and marketing. Alphabet said it’s a strategy that will help it both boost spending on new technologies and also help assure it is spending responsibly.
“After a period of big expense build up, there was an appreciation that we needed to manage the cadence of spend,” said Chief Financial Officer Ruth Porat.
Under the new system, bet companies would be allowed to develop their own services if they choose. Or, they can use Alphabet’s services, but they will need to pay for them. Alphabet would charge the companies based on an estimate of what they might pay to buy the same services elsewhere.
