Google companies

Alphabet, Google’s parent company, reports quarterly profit decline

San Francisco: Shares of Google’s parent company Alphabet fell on Tuesday after the internet giant reported that recently ended quarter earnings fell short of market expectations, with profits falling by compared to the previous year.

Alphabet reported first-quarter net profit of $16.4 billion on revenue that rose 23% to $68 billion from the same period last year. Alphabet’s profit was $17.9 billion in the first quarter of 2021.

Shares fell nearly five percent to $2,257 on the news.

The quarter brought strong growth to Alphabet’s search and cloud computing businesses, while the company continued to invest heavily in products and services, chief executive Sundar Pichai said in an earnings statement.

While Alphabet has seen online ad revenue soar to more than $46 billion, the cost of acquiring the online “traffic” that helps fuel that revenue has increased by around $2 billion from the same period a year ago, according to the earnings report.

Alphabet’s employee ranks have shrunk to just under 164,000 from 140,000 in the same quarter last year.

The Silicon Valley titan has also continued to pump money into data centers and parts of its operations that power its cloud computing services.

“We are pleased with first quarter revenue growth of 23% year over year,” said Ruth Porat, Alphabet’s chief financial officer.

“We continue to make thoughtful investments in Capex, (research and development) and in talent to support long-term value creation for all stakeholders.”

YouTube compress

Insider Intelligence senior analyst Paul Verna told AFP that while Google’s search business remained a “bright spot” for the company, revenue from video-sharing site YouTube was “a big miss.”

“TikTok has become a significant competitive threat,” Verna said of the pressure on YouTube.

“On the connected TV side, there’s a lot of competition from other platforms that have entered the space.”

Alphabet also faces challenges facing the broader market, such as inflation that is forcing advertisers to watch marketing budgets more carefully, Verna said.

The tech company is also dealing with the “natural consequences” of emerging from a pandemic that has boosted online activity to degrees that aren’t really sustainable, the analyst added.

“In this light. I don’t think today’s results are disastrous by any means,” Verna said.

Alphabet remains a search market leader and strong in video, he said, “but there’s only a saturation limit to growth.”

Privacy Labels

Meanwhile, Alphabet announced on Tuesday that it is adding tags to apps available on its Play Store to allow users of Android mobile devices to see what kinds of data is being collected about their activities.

“Users want to know what their data is collected for and whether the developer shares user data with third parties,” Suzanne Frey, vice president of Android privacy product, said in a blog post.

“That’s why we designed the Data Security section to allow developers to clearly indicate what data is collected and for what purpose it is used.”

Google announced last week that it was starting to roll out an option allowing European users to reject “cookies” with a single click, months after being hit with a massive fine.

Google, along with Facebook, has faced a flurry of court cases and penalties for its use of web tracking technology, which violates EU privacy law.

Cookies are data packets installed on a user’s computer that allow browsers to save information about their session.

“We have completely redesigned our approach, including changing the infrastructure we use to manage cookies,” the US giant wrote in a blog post.

Google has pledged to change its practices after France’s data watchdog CNIL fined it 150 million euros ($162 million) in January.