We formulate the baby universe construction rigorously by giving a primordial role to the algebra of observables of quantum gravity rather than the Hilbert space. Utilizing diffeomorphism invariance, we study baby universe creation and annihilation via change in topology. We then construct the algebra of boundary observables for holographic theories and show that it enhances to contain an extra Abelian tensor factor to describe the bulk in the quantum regime; via the gravitational path integral we realize this extra tensor factor, at the level of the Hilbert space, in the context of the GNS representation. We reformulate the necessary assumptions for the baby universe hypothesis using the GNS representation. When the baby universe hypothesis is satisfied, we demonstrate that the miraculous cancellations in the corresponding gravitational path integral have a natural explanation in terms of the character theory of Abelian $C^ast$-algebras. We find the necessary and sufficient mathematical condition for the baby universe hypothesis to hold, and transcribe it into sufficient physical conditions. We find that they are incompatible with a baby universe formation that is influenced by any bulk process from the AdS/CFT correspondence. We illustrate our construction by applying it to two settings, which leads to a re-interpretion of some topological models of gravity, and to draw an analogy with the topological vacua of gauge theory.
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