Alphabet shrugs off EU's record €4.3bn fine

Alphabet shrugs off EU's record €4.3bn fine

Alphabet shrugs off EU's record €4.3bn fine

Traffic acquisition costs, an important metric in Google's ad business, crept up to 23% of ad revenue in Q2, up slightly from the 22% reported during the same period past year. Alphabet is contesting that ruling.

Google has continued to give search ads more prominent space on mobile phones, helping to fuel the brisk sales growth. While that's nearly three times the S&P 500 Index's gain, it trails Netflix, Inc. and even Facebook Inc., which is trading near a record after rebounding from a data-privacy scandal in March sparked consumer backlash and regulatory scrutiny. Deutsche Bank also cautioned last week that Alphabet's report could be "slightly tricky" for investors to decipher as analyst estimates for revenue don't appear to reflect recent currency fluctuations.

But it's important to remember that simply paying the fine - if Google loses its appeal - doesn't make the problem go away.

Macquarie Group senior analyst Benjamin Schachter wrote in a report this month that "we are approaching a point where we (and we believe The Street collectively) are not understanding the size of search vs YouTube vs programmatic, which may lead to increasing volatility" in share price.

Pichai highlighted rising use of the company's digital maps, particularly in emerging markets.

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Following a reorganization of the company, the Google unit that includes the main search engine and YouTube video service still delivered the lion's share of revenues at $32.5 billion, with "other bets" driving $145 million in revenue.

"I think overall it [Android] has created more choice for everyone, not less", Pichai said during the call, when asked about the European Union decision. Google properties revenue jumped 26 per cent to US$23.3 billion. The penalty is equal to about 40% of Google's $US12.62 billion profit in 2017. On a call with analysts, CFO Porat highlighted spending on sales and marketing for Google's cloud division, which is hosting its marquee conference later this week.

Another good signーAlphabet also saw slowing growth in its so-called traffic acquisition costs, or how much the company pays to drive views to its sites.

"TAC came in lower than expectations which is a clear positive takeaway from the quarter", Dan Ives, head of technology research at GBH Insights, wrote in a note to investors. Google has been given 90 days to change these business practices.

As Google Translate continues to grow, it is a question of how long will Google wait before trying to cash in on its massive user base?

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