Proposal Number 10: Stockholder Proposal Regarding Strategic Alternatives

Resolved:

Shareholders of Alphabet, Inc. (“Alphabet”) request that the board of directors begin an orderly process of retaining advisors to study strategic alternatives and empower a committee of independent directors to evaluate those alternatives in exercise of their fiduciary responsibilities to maximize shareholder value.

Supporting Statement:

Our company’s revenues and market value have grown since its founding through organic growth and the acquisition of over 200 businesses such as YouTube, Android, DoubleClick and Waze.  As Alphabet’s market power and influence have increased, so have calls for the company to be broken up.

Since 2011, elected officials and regulators have raised concerns regarding possible anti-competitive practices by Alphabet and its subsidiary and predecessor Google.   While Alphabet has paid millions of dollars in fines under US antitrust law, the European Union levied a record $2.7 billion fine on Alphabet in 2017.

Customers have experienced privacy violations, data leaks, and illegal location tracking from Alphabet. Our company’s reputation has been damaged by allegations that it collaborated with the Chinese government to censor searches in China and expand China’s cyber-surveillance of its citizens.   In December 2018, the Federal Trade Commission was asked to investigate violations of the privacy of children by Alphabet.  In the same month, Alphabet was criticized for incomplete responses in reports prepared for the Senate Judiciary Committee on Russian interference in the 2016 US elections. A month earlier, thousands of Alphabet employees walked off their jobs to protest harassment in the workplace.

It appears that Alphabet may be too large and complex to be managed effectively.  Officials in the US & EU continue to be concerned about Alphabet’s market power in view of restrictions on monopolies.  We believe that shareholders could receive greater value from a voluntary strategic reduction in the size of the company than from asset sales compelled by regulators.

Alphabet continues to be controlled by two of its founders, despite their ownership of no Class A  shares, which account for 86% of outstanding shares as of March 29, 2018. Academic studies have demonstrated that the benefits of a dual-class capital structure like Alphabet’s decline in the years following an initial public offering.

We believe that it would be consistent with their fiduciary duties for the board of directors to evaluate, with the help of third-party specialists, the strategic options with the goal of maximizing shareholder value.

Some of the options to be evaluated by the board might include:

• Unification of Class A and B shares; and

• The sale, encumbrance or disposition of all or substantially all of Alphabet’s assets.

We urge shareholders to support this proposal.