Control freaks: Google's stock split

It's good for the founders, but is it in the company's interests?

Google have announced that they will be splitting their stock. This is normally a move which – although free-market purists disagree – is intended to slightly boost the overall value of a company. The idea is that small investors may be put off by the fact that it costs well over $600 to own a single share in Google, but would buy in to a company that costs $300. It is a reasonable theory. After all, one share in pre-split Google would be a significant proportion of a hobbyist investor's portfolio; if they jump on board in significant numbers, it could provide a mild capital boost.

Except that's not really why Google split their stock. They did it because their Troika – Larry Page, Sergei Brin and Eric Schmidt – never really wanted to give up control in the first place. The split will create an entirely new class of non-voting stocks, which will mean those three will continue to own 58 per cent of the votes for the foreseeable future. Indeed, twice in the founders' letter announcing the change, Page and Brin write of the "very long term"; they have no intention to give up control any time soon.

On the other hand, they have to specify the very long term, because the scale of their control of the company is such that it is only in a long timeframe that it is coceivable that they could lose it. Even if Google doubled the number of shares owned by people other than those three, they would still hold control in the company (although Larry and Sergei would no longer hold an absolute majority on their own, but would need Eric's input).

Felix Salmon thinks he knows why they made this change:

This move, then, is basically a way for Google to try to retreat back into its pre-IPO shell as much as possible. It never really wanted to go public in the first place — it was forced into that by the 500-shareholder rule...

(The SEC has a rule which forces companies with more than 500 shareholders to register with them, revealing most of their internal accounts. Faced with this, many companies decide to go public, which has much the same restrictions but also promises a massive payout)

...but at this point, Google is far too entrenched in the corporate landscape to be able to turn back the clock. It’s too big, and too important, and has been public for too long. That’s the thing about going public: it might suck, but once you’ve done it, you’ve done it. And at that point, if you try to pull a stunt like this, you risk looking all too much like Rupert Murdoch.

Salmon also points out that moves like this were illegal in the US for much of the last century. From the 1920s until 1986, companies had to have equal voting rights. Indeed, it was seen as a pretty fundamental rule of the market. Not that we should hold Google to the standards of 1985. That would be tricky for a number of reasons.

Google are splitting their stocks to concentrate control. Don't be evil? Credit: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Tim Farron is being unfairly maligned for inviting us to smell his spaniel

The truth behind “smell my spaniel”.

Out on the campaign trail in Cambridge, the Lib Dem leader Tim Farron was caught inexplicably inviting voters to “smell my spaniel”.

Here is the shock footage:

“Smell my spaniel, maybe, maybe… oh, how are you? Good to see you!” he said, while the top political journalists of the nation scratched their heads. “A new Lib Dem slogan?” asked the BBC. The “catchphrase of the general election” declared the Telegraph. A new, surprisingly progressive “theological pronouncement”, was this mole’s first thought.

And he has, of course, been ridiculed online:

But no.

Look closer.

What’s going on is clear. Farron is not inviting voters to sniff his spaniel at all; he is addressing a dog. One of the activists in the huddle he is speaking to is holding a little dog wearing a Liberal Democrat rosette:

And here is said dog with Farron:

Farron is clearly being sniffed by the dog, because he is carrying the smell of his own dog, Jasper the spaniel.

Was Farron actually commenting that the little Lib Dem pooch was sniffing its party leader because he smelt like another dog? In these uncertain times of fake news and eroding trust, let’s get our spaniel sniffing story straight.

I'm a mole, innit.

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