Alphabet profits rocked by EU fine
Profits at Alphabet, the parent company of search big Google, are hit by the record fine obligatory by the ecu Commission last month.
The firm same it saw robust growth within the second quarter, with revenues of concerning $26bn (£19bn), up twenty first compared to identical amount in 2016.
But profits for the 3 months to the top of Gregorian calendar month were $3.5bn, quite four-hundredth not up to they'd are while not the fine.
Year-on-year profits fell nearly half-hour.
Google was penalized two.42bn euros ($2.7bn; £2.1bn) by the ecu Commission last month when it dominated the corporate had abused its power by promoting its own searching comparison service at the highest of search results.
The amount was the regulator's largest penalty up to now against a corporation defendant of distorting the market.
Alphabet has already said it may challenge the fine.
Google ShoppingImage copyrightEPA
Image caption
Google faces further penalties if it does not change the way Google Shopping ads are displayed within three months
Analysis by Dave Lee, North America technology reporter:
Naturally, this quarter's earnings tell a very skewed picture of the health of Alphabet. It's been a terrific quarter which, were it not for that record breaking fine, would have exceeded expectations in almost every way.
Google is appealing that fine, so we could find at some point in the future those "lost" billions are added back on, making for a particularly bountiful quarter somewhere down the line.
The company wants to keep an eye on its advertising business, however. The cost per click - i.e how much money Google makes with every ad click - has dropped by 23% year on year. That's much more than analysts had hoped.
It's a sign that Google is having to work harder to keep those incredible revenues coming in.
And if it is to comply with what it sees as overly strict European Commission measures, its ability to use its market power to dominate online advertising may be restricted. Just as well, then, that the non-advertising side of Alphabet is doing well too.
On Monday, chief financial officer Ruth Porat said the firm is reviewing the decision and working on ways to address the regulator's concerns. She refused to comment further on how it may affect the business, describing it as an ongoing legal matter.
"The main thing is we're very focused on helping users and advertisers and are reviewing our options," she said.
The tech giant's shares, which had risen ahead of the firm's publication of its earnings, fell more than 3% in after-hours trading. Some said that was a sign shareholders were cashing in.
'Strong growth'
Alphabet makes most of its money from advertising. It said revenues from advertisers on its own sites, such as YouTube and Gmail, and other sites together increased 18% year-on-year to $22.7bn.
YouTube, for example, now has about 1.5bn monthly viewers, who watch an average of 60 minutes a day, said Google chief executive Sundar Pichai.
The firm has also been working to diversify its revenue stream, investment in areas such as driverless cars, cloud services and life sciences that it says square measure united by the opportunities given by machine learning.
Alphabet's alternative revenues - that embrace cash from things like app purchases and its cloud services - jumped quite four-hundredth to concerning $3bn.
"We're delivering robust growth with nice underlying momentum, whereas continued to form centered investments in new revenue streams," Ms Porat same.

Share this

Related Posts

Previous
Next Post »