Alphabet is reportedly going to make its subsidiaries pay for Google's services


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Alphabet executive chairman Eric Schmidt.

In August, Google announced a huge internal shakeup: A new parent company, called Alphabet would be created, with numerous projects not part of Google's core business spun out into separate subsidiaries.

The change took effect at the start of October, and details are continuing to emerge about how the new parent company will operate.

The latest report, coming via The Wall Street Journal, is that there are plans to make subsidiaries of Alphabet pay Google if they want to use its core infrastructure.


This change will mean that smart-home company Nest, or moonshot incubator Google X - both spun out as subsidiaries of Alphabet - are free to do their own recruiting or build their own technical infrastructure if they feel up to it. But if they want to use the established services provided by Google (and which remain part of Google following the restructuring), they'll have to cough up for the privilege.

According to the Journal's report, it will cost the subsidiaries "based on an estimate of what they would pay to buy the service elsewhere." We've reached out to Google for confirmation on this, and will update when it responds. But the logic behind it is apparently to make sure projects are "self-sustaining," and will force them to pay attention to their budgets.

Companies that operate as subsidiaries of Alphabet include Nest, Google X, investment arm Google Capital, venture-capital investment vehicle Google Ventures, Sidewalk Labs - a project for improving modern cities, human longevity research project Calico, high-speed internet builder Fiber, and others.