Larry Page, a 1995 graduate of the University of Michigan's College of Engineering and a co-founder of Google, was named CEO of the Internet giant today in an announcement that surprised industry observers.

Page replaces Google CEO Eric Schmidt, who will become executive chairman.

In a blog post, Schmidt said Page would "merge Google's technology and business vision brilliantly."

"I am enormously proud of my last decade as CEO, and I am certain that the next 10 years under Larry will be even better!" Schmidt wrote. "Larry, in my clear opinion, is ready to lead."

Page's connection to U-M is credited with Google's 2006 decision to launch an AdWords sales office in downtown Ann Arbor. The company, which originally promised to add 1,000 jobs in Ann Arbor by 2011, currently employs about 250 here.

Page has also taken an interest in U-M's transportation future. AnnArbor.com reported last year that Page had a conversation with U-M President Mary Sue Coleman about alternative transportation options to connect main and north campuses.

His appointment as CEO of Google more than a decade after founding the company along with Sergey Brin adds to the list of U-M grads leading major technology companies.

Dick Costolo, a U-M grad, is CEO of social media service Twitter, and two U-M grads — investors Brad Keywell and Eric Lefkofsky — are credited with helping daily deal website Groupon turn into a wild success.

Schmidt described Google's leadership transition as a natural move.

"For the last 10 years, we have all been equally involved in making decisions," he wrote, referring to himself, Page and Brin. "This triumvirate approach has real benefits in terms of shared wisdom, and we will continue to discuss the big decisions among the three of us. But we have also agreed to clarify our individual roles so there’s clear responsibility and accountability at the top of the company."

In his spring 2009 commencement speech at U-M, Page told graduates to dream big.

"Since no one else is crazy enough to do it, you'll have little competition," he said.

Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.