Earnings of Google parent Alphabet top Wall Street expectations

Randal Sanchez
July 24, 2018

The Mountain View-based tech giant reported a net income of $3.2 billion, with non-GAAP earnings of $4.54 per share on revenue of $32.7 billion, when including traffic acquisition costs (TAC).

The bulk of Alphabet's revenue continues to come from advertising, which amounted to $28bn for the quarter, or roughly 88 per cent of sales.

The E.U. had announced a record $5 billion fine against the company, charging Alphabet with abusing its dominant position in the smart phone operating system space to push its own apps and services. In the past, Google earned as much as 97 percent of its revenues from ads, but that number has been falling. Chief Financial Officer Ruth Porat suggested that the company would not sacrifice investment in its cash cow of advertising in favour of other bets like autonomous cars and delivery drones.

But it's important to remember that simply paying the fine - if Google loses its appeal - doesn't make the problem go away. "One of the unintentional consequences of GDPR is the strengthening of the duopoly", said Gil Elbaz, a former Google executive who now runs the marketing firm Factual. Advertising was still the main source of revenue, pulling in $28 billion in the second quarter, which was a 24 percent rise from the year-ago period. This quarter, ads represented just 84 percent of Google's overall revenues.

European Competition Commissioner Margrethe Vestager told Bloomberg that Google began trying to resolve the investigation a year before the fine was imposed.

FILE PHOTO: The waxing moon is seen over the logo of Google at its European Engineering Center in Zurich, Switzerland July 19, 2018.

Tesla pushes suppliers to return payments
It is unclear how much cash back Tesla has requested, or how many of its suppliers have received this request. A tweet from co-founder Elon Musk has confirmed this.

Google has more than 95 percent of share of search in Europe, according to the European Commission's complaint against the company.

Cost increases have come across the enterprise. "There is regulatory risk, though we have yet to find evidence that regulations will adversely impact the usefulness of Google for consumers or advertisers".

Google must now bring this conduct to an end within 90 days or face penalty payments of up to 5 percent of the average daily worldwide turnover of Alphabet, the EC said.

Google, though, has increasingly linked together its services technologically through automated ad-buying tools that empower algorithms rather than humans to pick where ads are placed.

Shares of Alphabet have gained 13 percent this year, compared with 16 percent for Facebook, 51 percent for Amazon and 76 percent for Twitter.

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