Why Are There Two Google Stocks: Understanding Alphabet’s GOOGL and GOOG

Understanding Alphabet’s Dual Stock Listings: GOOG vs. GOOGL

Greetings, aspiring investors and seasoned traders alike! We often encounter situations in the financial markets that, at first glance, seem peculiar or counterintuitive. One such instance that frequently prompts questions, especially among those new to navigating equity markets, is the existence of two distinct stock ticker symbols for the same underlying company. When we look at Alphabet Inc., the parent company behind the ubiquitous Google search engine, YouTube, Waymo, and numerous other ventures, we see two primary publicly traded tickers: GOOGL and GOOG.

Why would a single corporation issue shares under two different symbols? Are they fundamentally different assets, or merely variations on a theme? As we embark on this exploration together, think of us as your guide through this fascinating corner of corporate finance and market mechanics. We will demystify the reasons behind Alphabet’s dual listing, understand the practical implications for you as an investor or trader, and explore the broader context of multi-class share structures in the corporate landscape.

At its core, understanding the distinction between GOOGL and GOOG requires delving into the concept of different share classes within a single company’s capital structure. Many companies, particularly large ones, simplify their stock structure for public investors by issuing only one class of common stock, typically designated as Class A, where each share carries one vote. However, some companies, for strategic reasons that often relate to control and governance, choose a more complex structure involving multiple classes of shares, each potentially carrying different rights.

• The GOOGL class represents shares with one vote.
• The GOOG class does not provide any voting rights.
• Class B shares, held by insiders, possess super-voting power.

So, let’s begin our journey by uncovering the fundamental difference that separates GOOGL and GOOG and then trace the historical and strategic motivations behind this structure. Prepare to gain a deeper understanding of how corporate founders and leaders can structure ownership to influence the future direction of their enterprises, even after going public.

The Genesis of Two Classes: A History Rooted in Control

To truly grasp why Alphabet has two public stock classes, we must travel back in time to the origins of Google, long before it became Alphabet. When Google initially went public in 2004, it did so with a dual-class structure. There was Class A common stock (which is now traded as GOOGL) and Class B common stock. At the time, the key difference was already in voting rights: Class A shares received one vote per share, while Class B shares received ten votes per share.

This initial dual-class structure was a deliberate choice by Google’s founders, Larry Page and Sergey Brin, along with then-CEO Eric Schmidt. Their vision for Google was ambitious and long-term. They believed that maintaining control over the company’s strategic direction, free from the potential short-term pressures often exerted by public shareholders focused solely on quarterly earnings, was crucial for innovation and sustained growth. By holding the majority of the super-voting Class B shares, the founders ensured they could retain control even as the company issued more Class A shares for capital raises, employee compensation, or acquisitions.

However, as Google grew rapidly through the late 2000s and early 2010s, it needed to issue increasing amounts of equity, particularly for stock-based compensation to attract and retain top talent. Each time Class A shares were issued, while it helped the company compensate employees and fund growth, it also diluted the voting power of the existing Class A shareholders and, crucially from the founders’ perspective, slightly diluted the *proportion* of voting power held by the Class B shares relative to the total voting power outstanding. While the Class B shares still held significant power, the mechanism for maintaining control felt increasingly susceptible to future dilution.

This led to a significant decision in 2012: Google announced a plan to create a third class of stock, Class C. The primary motivation remained the same – to allow the company to issue more stock without diluting the founders’ voting control. This plan was eventually executed in 2014 through a unique stock split, which we will detail shortly. This historical context is vital because it highlights that the creation of the Class C shares (GOOG) wasn’t arbitrary; it was a strategic maneuver specifically designed to perpetuate the founders’ ability to steer the company’s course.

Deconstructing the Share Classes: A, B, and C Explained

Let’s take a closer look at the three classes of Alphabet stock that exist today, even though only two are readily available for most public investors to buy and sell.

We have:

• Class A Shares: These are the shares traded under the ticker symbol GOOGL on the Nasdaq stock exchange. They represent what most investors consider standard common stock. The crucial feature of Class A shares is that they come with voting rights. Specifically, each Class A share entitles its holder to one vote on matters brought before shareholders at annual meetings or special corporate votes. If you own GOOGL, you get to vote on things like electing board members or approving major corporate actions, albeit your single vote per share is typically a tiny fraction of the total.
• Class C Shares: These are the shares traded under the ticker symbol GOOG, also on the Nasdaq. Unlike Class A shares, Class C shares confer no voting rights whatsoever. They are often referred to as “capital stock” or “non-voting stock.” When you own GOOG, you own a piece of Alphabet’s equity and are entitled to the same economic benefits as Class A shareholders (dividends, if ever paid, and share price appreciation), but you do not get to participate in shareholder votes.
• Class B Shares: This is the class of stock that is not publicly traded. Class B shares are primarily held by the company’s founders, Larry Page and Sergey Brin, and a few other long-serving insiders. The defining characteristic of Class B shares is their super-voting rights. Each Class B share carries ten votes per share. This is the mechanism that ensures Page and Brin, despite potentially owning a smaller percentage of the total *equity* of Alphabet compared to the public, maintain a majority of the total *voting power*. As long as they hold a significant portion of the Class B shares, they effectively control the company’s strategic decisions and board composition.

Understanding these three classes is key to understanding the Alphabet stock structure. Most public investors will only interact with Class A (GOOGL) and Class C (GOOG). The Class B shares operate behind the scenes, consolidating control in the hands of the founders.

Voting Rights: The Fundamental Distinction Between GOOGL and GOOG

As we’ve highlighted, the most significant formal difference between GOOGL (Class A) and GOOG (Class C) lies in voting rights. When you purchase a share of GOOGL, you become a shareholder with the right to cast a vote on certain corporate matters. These typically include:

• Electing the members of the board of directors.
• Approving or rejecting major corporate actions, such as mergers, acquisitions, or significant changes to the company’s charter.
• Voting on executive compensation packages (often advisory votes).
• Other proposals put forth by the company or, occasionally, by other shareholders.

Think of it like participating in a corporate democracy. Your one share of GOOGL gives you one ‘vote’ in this system. If you own 100 shares of GOOGL, you have 100 votes.

In stark contrast, a share of GOOG grants you no such privilege. You are an economic owner of the company – entitled to benefit from its success through share price appreciation and any potential future dividends – but you are effectively a silent partner in terms of corporate governance. You cannot vote on board elections, corporate strategy, or other shareholder resolutions.

This difference in voting power is the sole intended functional disparity between the two public share classes from a corporate structure standpoint. Both classes represent ownership in the exact same underlying business. They have the same claim on the company’s assets and earnings (though the Class C shares were created specifically to facilitate the issuance of equity without diluting voting power, their economic rights are otherwise equivalent to Class A). The only formal divergence is the voice in corporate decision-making.

Does this difference in voting rights translate into a meaningful difference for the average investor? That’s a question we’ll explore in more detail shortly, as the practical impact of voting rights in a multi-class structure heavily influenced by super-voting shares is often less significant than the formal definition might suggest.

The Strategic Imperative: Protecting Founder Vision and Long-Term Strategy

Why would founders and companies go to such lengths to create and maintain multi-class structures, especially ones that concentrate voting power? For Alphabet, and indeed for many other founder-led technology companies, the strategic imperative is clear: maintaining control to ensure the long-term vision is prioritized over potential short-term market demands.

Founders like Larry Page and Sergey Brin often have a deeply ingrained understanding of the company’s culture, its technological future, and its potential trajectory. They may believe that focusing on ambitious, long-term projects (like self-driving cars with Waymo or fundamental research with DeepMind) which may not yield profits for many years, is essential for the company’s ultimate success. However, public markets and some investors are often more focused on immediate profitability and quarterly performance.

A single-class stock structure, where each share has one vote, can make a company vulnerable to pressure from activist investors or even hostile takeovers if a significant portion of shares falls into the hands of those who disagree with the current management’s strategy. Dilution from issuing new shares further spreads voting power, potentially weakening the founders’ ability to resist such pressures over time.

By implementing a multi-class structure with super-voting Class B shares held by insiders and non-voting Class C shares for broader distribution, Alphabet’s founders effectively created an anti-takeover mechanism and a shield against short-termism. They can issue billions of dollars worth of GOOG (Class C) shares for acquisitions or employee compensation without giving up any voting control. This allows them to raise capital or attract talent using equity while retaining the power to pursue their vision, even if it means making decisions that are temporarily unpopular with parts of the public market.

This structure is not without its critics, who argue that it can reduce accountability to public shareholders and potentially entrench management, even if they are underperforming. However, from the founders’ perspective, it is seen as a necessary tool to protect the company’s culture and innovative capacity, allowing them to make bold, long-term bets without fear of being quickly overruled by external shareholders primarily focused on immediate returns.

How the 2014 Stock Split Created the Class C Shares

The creation of the non-voting Class C shares (GOOG) in 2014 was a pivotal event in Alphabet’s stock history and the mechanism by which the third class of stock became publicly traded. It wasn’t a typical stock split where existing shares are simply multiplied. Instead, it was more of a “dividend” of new shares, designed specifically to implement the multi-class structure publicly.

Here’s how it worked:

At the close of trading on April 2, 2014, Google (as it was then called) executed a 2-for-1 stock split. However, this split wasn’t symmetrical across the existing Class A shares. For every one share of Class A stock (GOOGL) that an investor owned, they received one *additional* share of the *new* Class C stock (GOOG) as a dividend.

So, if you owned 100 shares of GOOGL before the split, immediately after the split/dividend, you owned 100 shares of GOOGL *plus* 100 shares of GOOG. Your total number of shares in the company doubled, but they were now split between two different classes.

The crucial aspect of this maneuver was its effect on voting power. The original 100 shares of GOOGL retained their voting rights (100 votes). The newly issued 100 shares of GOOG came with *no* voting rights. From an economic perspective, your total ownership value in Google remained the same (the price of the original GOOGL shares effectively split across the new GOOGL and GOOG shares). But from a voting perspective, the total number of voting shares outstanding doubled (as the number of Class A shares remained the same while total public shares doubled), effectively halving the voting power per share for existing Class A shareholders compared to what it would have been if all new shares issued in the future were Class A.

This split was designed to allow Google to issue future shares as the non-voting Class C stock. For example, when Google needed to compensate employees with stock or make acquisitions using stock, they could issue GOOG shares. This provided the necessary equity currency without increasing the number of voting shares (Class A) in the market, thus preventing the dilution of the founders’ and insiders’ super-voting Class B control.

This action faced some initial legal challenges from shareholders who felt their voting rights were unfairly diluted or that the creation of a non-voting class disproportionately benefited insiders. However, the courts ultimately upheld the structure, recognizing it as a valid mechanism within corporate law, provided it was properly approved.

It’s also worth noting that Alphabet had another significant stock split much later, a 20-for-1 split in July 2022. This split was different; it applied equally to both Class A and Class C shares. If you owned 1 share of GOOGL, you received 19 additional shares of GOOGL. If you owned 1 share of GOOG, you received 19 additional shares of GOOG. This split primarily aimed to lower the per-share price to make the stock more accessible to individual investors, and it did not alter the relative voting rights structure between the share classes.

Navigating the Market: Price Dynamics and Arbitrage Efficiency

Now that we understand the structural difference, what about the market? How do these two distinct share classes trade? Since GOOGL (Class A) has voting rights and GOOG (Class C) does not, we might theoretically expect GOOGL shares to trade at a slight premium compared to GOOG shares. After all, a right to vote, however limited, should arguably add some incremental value.

In practice, this theoretical price difference is often minimal, sometimes only a few dollars, or even negligible on a percentage basis. Why is this the case? The primary reason is arbitrage.

Arbitrage is a sophisticated trading strategy that seeks to profit from tiny price differences between related assets in different markets or forms. In the case of GOOGL and GOOG, professional traders and quantitative funds constantly monitor the prices of both tickers. Since both stocks represent ownership in the exact same underlying business, their values should closely track each other. The only difference is the voting right.

If a noticeable price gap emerges where GOOGL becomes significantly more expensive than GOOG (beyond a small, typical premium), arbitrageurs will step in. They might simultaneously buy the cheaper GOOG shares and sell the more expensive GOOGL shares. This action increases demand for GOOG (pushing its price up) and increases supply of GOOGL (pushing its price down), quickly narrowing the price gap back towards equilibrium.

Conversely, if GOOG were somehow to trade at a premium to GOOGL, arbitrageurs would sell GOOG and buy GOOGL, again correcting the imbalance. This rapid, high-frequency trading activity keeps the prices of GOOGL and GOOG very closely aligned most of the time. The price difference is usually small, reflecting only a marginal market valuation for the voting right in Class A shares.

What does this mean for you as an investor? It means that for most practical purposes, buying GOOG or GOOGL is largely equivalent from a pure investment perspective focused on gaining exposure to Alphabet’s business performance. The economic return – driven by the company’s profitability, growth, and overall market sentiment – will be virtually identical whether you own Class A or Class C shares. Any difference in price performance over time will be trivial, usually reflecting the small, fluctuating premium for the voting right.

Therefore, when choosing between the two, factors like the current minor price difference, liquidity (though both are highly liquid), or sometimes which ticker is included in specific indices or investment products might influence your decision, rather than the fundamental difference in voting rights.

What Voting Rights Mean (and Don’t Mean) for the Average Investor

Let’s delve deeper into the practical significance of the voting rights held by GOOGL shareholders. While it’s true that owning GOOGL formally gives you a vote, the reality for the average retail investor is that this vote carries very little weight in determining the outcome of shareholder matters at Alphabet.

Remember our discussion of Class B shares? These super-voting shares, held by Larry Page, Sergey Brin, and other insiders, carry 10 votes per share. Collectively, the holders of Class B shares control a significant majority of the total voting power at Alphabet. Estimates often place their combined voting power well over 50%, even though they own a smaller percentage of the total outstanding *equity* (Class A + Class C + Class B combined).

What does this mean in practice? It means that on virtually any matter requiring a shareholder vote, the holders of Class B shares can unilaterally determine the outcome. Whether it’s electing directors, approving major transactions, or voting on shareholder proposals, the votes cast by public Class A shareholders (GOOGL) are largely symbolic. Your vote, while technically real, is highly unlikely to change the result of any contested matter as long as the Class B holders vote as a bloc.

Consider it like this: if there’s an election, and one candidate already has significantly more than half of the total votes guaranteed from a specific group, the votes from everyone else, while counted, won’t alter the outcome. For Alphabet, the Class B shareholders *are* that guaranteed block of votes.

This is why the voting right associated with GOOGL typically commands only a small premium in the market. The market understands that the practical value of this vote for a public shareholder is minimal because ultimate control rests with the Class B holders. There are rare circumstances where a shareholder proposal might pass with broad support from public shareholders *and* be something the Class B holders don’t feel strongly enough about to block, but these instances are uncommon and usually relate to minor governance issues rather than core strategic direction or board composition.

Therefore, while it’s intellectually interesting to know that GOOGL comes with a vote, for the vast majority of retail investors, the presence or absence of voting rights is not a material factor in deciding whether to buy GOOG or GOOGL. Your influence on corporate policy through your shares is effectively non-existent in this structure. Your focus should remain on Alphabet’s business performance and the economic prospects of its shares, regardless of the class.

Beyond Alphabet: Other Companies with Multi-Class Structures

While Alphabet (GOOGL/GOOG) is a prominent example, it is by no means the only company with a multi-class stock structure designed to concentrate control. This governance model is particularly common among technology companies, media conglomerates, and founder-led businesses where preserving the founder’s vision or protecting a specific corporate culture is deemed paramount.

Here are a few other well-known companies that utilize multi-class share structures:

These examples illustrate that multi-class structures are a recognized, though sometimes debated, tool in corporate finance and governance. They are often implemented by companies where founders or a controlling family wish to maintain strategic control over the long term, independent of the pressures from public markets or potential activist shareholders. Understanding this context helps us see Alphabet’s structure not as an isolated anomaly, but as part of a broader trend among certain types of companies.

Multi-Class Structures and Index Inclusion Policies

The rise of multi-class share structures has not gone unnoticed by the bodies that manage major stock market indices, such as S&P Dow Jones Indices (which manages the S&P 500) and MSCI. These index providers strive to represent the broad market accurately and often consider factors beyond just market capitalization when deciding which companies to include.

One concern raised about multi-class structures, particularly those with super-voting shares concentrated among insiders, is that they can decouple ownership from control. Investors buying public shares (like GOOGL or GOOG) might own a large piece of the company’s economic value, but have little to no say in its governance. Some index providers and market participants view this as potentially detrimental to shareholder rights and good corporate governance practices.

In response to these concerns, S&P Dow Jones Indices updated its policy in 2017 regarding companies with multi-class share structures. The new policy stated that S&P U.S. indices, including the prestigious S&P 500, would no longer add companies with multiple share class structures if they were not already included prior to the policy change. The rationale was that such structures violate the principle that companies included in major indices should have a governance structure where public shareholders have standard voting rights.

Importantly, this policy change was not retroactive. Companies that were already part of the S&P 500 or other S&P U.S. indices with multi-class structures, including Alphabet (which was already a major component under both GOOGL and GOOG tickers), were “grandfathered in.” This means Alphabet remains in the S&P 500 today, and its inclusion was unaffected by the 2017 rule change. However, a hypothetical new company going public today with a similar multi-class structure might face exclusion from these major indices, potentially impacting its attractiveness to institutional investors who track or invest in index funds.

This policy highlights the ongoing debate about multi-class structures within the investment community and how these structures can influence not just corporate governance but also a company’s standing within the broader financial markets. For investors tracking indices, understanding these policies can explain why certain prominent companies might be absent despite meeting market capitalization requirements.

The Ongoing Debate: Pros and Cons of Dual-Class Shares

The existence and increasing prevalence of multi-class stock structures, especially those concentrating voting power, are subjects of ongoing debate among corporate governance experts, investors, and policymakers. There are valid arguments on both sides.

Arguments in favor of multi-class structures (Pros):

• Protection of Long-Term Vision: As discussed with Alphabet, proponents argue this structure shields companies from the pressure to focus solely on short-term profits, allowing management and founders to invest in potentially risky but transformative long-term projects and innovation. This is seen as particularly crucial for tech companies and those in rapidly evolving industries.
• Stability and Leadership Continuity: Concentrated voting power can provide stable leadership, preventing frequent changes in strategy or management that can occur if control is constantly contested among public shareholders.
• Anti-Takeover Defense: It makes hostile takeovers virtually impossible, allowing the company to maintain independence and pursue its chosen strategy without being forced into a sale or restructuring by an unwanted suitor.
• Facilitates Equity Issuance: The ability to issue non-voting shares (like GOOG) allows companies to raise capital, make acquisitions, and compensate employees with stock without diluting the control held by founders or a core group.

Arguments against multi-class structures (Cons):

• Reduced Accountability to Public Shareholders: Critics argue that when voting power is concentrated, management can become less accountable to public shareholders, potentially leading to decisions that benefit insiders at the expense of minority shareholders.
• Potential for Entrenchment: Super-voting structures can entrench founders or management, making it difficult to remove them even if they are underperforming or making poor strategic decisions.
• Governance Risk: This structure can create governance risks, as the checks and balances typically provided by active public shareholders are diminished.
• Decoupling of Ownership and Control: It separates economic ownership (held by all shareholders) from voting control (concentrated among a few), which some argue is fundamentally unfair to public investors who bear the economic risks of ownership but lack commensurate control.
• Index Exclusion: As seen with S&P Dow Jones Indices, this structure can lead to exclusion from major market indices, potentially affecting liquidity and institutional investment.

For investors, understanding this debate is part of evaluating the corporate governance of the companies you consider investing in. While Alphabet’s success under this structure is undeniable, it’s important to be aware of the potential risks and benefits associated with concentrated control.

Making Your Choice: Practical Considerations for Investors

So, if you’re an investor looking to own a piece of Alphabet, you face the choice between buying GOOGL (Class A, voting) and GOOG (Class C, non-voting). Given everything we’ve discussed, how should you approach this decision? Here are some practical considerations:

• Economic Equivalence: Reiterate to yourself that from the perspective of owning a piece of Alphabet’s business and benefiting from its financial performance, GOOGL and GOOG are economically equivalent. Any future dividends (if ever paid), stock splits (like the 2022 one), or other corporate distributions will apply equally to both classes.
• The Voting Right: Understand that while GOOGL technically has a vote, the practical influence of this vote for the average retail investor is minimal due to the super-voting Class B shares. Do you place a symbolic value on having a vote, even if it’s unlikely to change outcomes? For most investors focused purely on financial returns, the answer is no.
• Price Difference: Check the current market prices for GOOGL and GOOG before making a purchase. As we discussed, arbitrage keeps them very close, but there might be a small premium for GOOGL. Is that small premium worth paying for the nominal voting right? Or would you prefer to save that small difference by buying the slightly cheaper GOOG shares? Over time, this small difference is unlikely to impact your overall return significantly, but it is a tangible factor at the point of purchase.
• Liquidity: Both GOOGL and GOOG are extremely liquid stocks, trading millions of shares daily on the Nasdaq. You will have no trouble buying or selling either one. There might be minor differences in average trading volume or bid-ask spread, but these are usually negligible for retail transaction sizes.
• Index Inclusion: Both GOOGL and GOOG are included in major indices like the S&P 500. If you invest via index funds, you likely already have exposure to both classes. If you are building your own portfolio and mimicking an index, you might buy both in proportion to their index weighting, or simply pick one based on price if the index weights are similar.
• Investment Goals: Your decision should ultimately align with your overall investment goals. Are you investing for long-term growth? Diversification? Capital preservation? The choice between GOOG and GOOGL does not impact these fundamental objectives; your decision to invest in Alphabet itself is the primary factor.

In essence, for the vast majority of investors, the choice between GOOGL and GOOG boils down to a minor price difference and personal preference regarding the symbolic act of holding voting versus non-voting shares. The performance of your investment will depend almost entirely on the success of Alphabet’s business, not on which ticker you chose.

As you deepen your understanding of market structures and corporate actions like this, you become a more informed investor. This knowledge, coupled with diligent research into a company’s fundamentals and the broader market environment, is key to making sound investment decisions. We hope this exploration of Alphabet’s two stock classes has shed light on a complex topic and empowered you with knowledge. Keep learning, keep questioning, and continue to build your expertise in the fascinating world of finance.

why are there two google stocksFAQ

Q：What is the difference between GOOGL and GOOG?

A：GOOGL shares have voting rights, while GOOG shares do not.

Q：Why did Alphabet create Class C shares?

A：Class C shares were created to allow the issuance of additional stock without diluting the voting control of founders.

Q：Are GOOGL and GOOG shares economically equal?

A：Yes, both represent ownership in the same underlying company and have similar economic benefits.