Conglomeration

Ben Thompson:

That, though, begs a bigger question: why should all of these disparate ventures be a part of the same company at all? While conglomerates were in vogue in the late 60s and early 70s, over the last thirty years the accepted wisdom has been it is better for companies to specialize and for investors to diversify on their own, a viewpoint I agree with: one need only look at Microsoft’s litany of failed acquisitions to appreciate how wasteful many companies can be, and how justified investors usually are in demanding a return of their money. What right does Alphabet have to buck this trend?

That is actually an easy one to answer: Page and Brin can do whatever they want because of Google’s dual-class structure.

★ Tuesday, 11 August 2015