Google’s parent Alphabet on Thursday reported lower earnings and a slight increase in revenue for last year’s fourth quarter as a decline in online advertising spending and competition from rivals weigh on the search giant.
While overall revenue increased, advertising revenue declined nearly 4 percent and YouTube revenue declined 8 percent year-over-year. That seemed to spook investors, who sent the company’s shares lower in after-hours trading.
The Mountain View, Calif.-based company said it made $13.62 billion, or $1.05 per share, in the October-December quarter. That’s down 34 percent from $20.64 billion, or $1.53 per share, in the same period last year.
Revenue increased 1 percent to $76.05 billion from $75.33 billion.
According to FactSet Research, analysts expected Alphabet to report earnings of $1.18 per share on sales of $76.2 billion for the period.
Like Facebook parent Meta, Amazon and other technology companies, Alphabet is in a difficult economic phase that is particularly damaging to the online advertising market.
Last month, Alphabet announced it was cutting 12,000 jobs, or about 6 percent of its workforce. It was the company’s biggest round of layoffs to date and comes on top of tens of thousands of other job losses recently announced by Microsoft, Amazon, Meta and other tech companies tightening their belts amid the darkening outlook for the industry.
In response to the layoffs, unionized Google workers, members of the Alphabet Workers Union-CWA, gathered outside the company’s New York office during the company’s conference call.
“Alphabet is one of the most profitable companies in the world and well positioned to weather any economic storm. But instead, our leaders decided to lay off 12,000 of our employees, including many on sick or maternity leave and many with over a decade of loyal service,” the union said in a statement.
Struggling in a “challenging” economic climate, Alphabet is working to overhaul its cost structure to build “financially sustainable, dynamically growing businesses” across the company, CEO Sundar Pichai said.
“Our long-term investments in deep computer science position us extremely well as AI reaches an inflection point, and I’m excited about the AI-powered leaps we will unveil in the quest and beyond,” Pichai said in a statement.
Google is facing some competition in the artificial intelligence space from Microsoft, which announced last month that it was making a “multi-year, multi-billion dollar investment” in artificial intelligence startup OpenAI, makers of the hugely popular ChatGPT and other tools that can write readable text and generate new images.
The technology could help Microsoft’s own search engine, Bing, compete with Google by answering searches with more complete answers instead of just links.
Pichai also touted “great momentum” in cloud, YouTube subscriptions, and Pixel devices, signaling investors that Alphabet has plenty of revenue streams to grow its business beyond advertising.
Still, advertising still makes up the majority of Alphabet’s revenue.
In addition to economic pressure, Google is also subject to regulatory pressure. Last month, the Justice Department and eight states filed an antitrust lawsuit against Google to destroy its alleged monopoly over the entire online advertising ecosystem as a harmful burden on advertisers, consumers, and even the US government.
The government alleged in the complaint that Google is trying to “neutralize or eliminate” competitors in the online advertising market through acquisitions and that it is trying to force advertisers to use its products by making competitors’ offerings more difficult to use.
Alphabet Inc. shares fell about 4 percent in extended trading after the company’s earnings report was released.
https://www.independent.ie/business/world/alphabet-posts-lower-q4-profit-amid-ad-squeeze-and-competition-42325894.html Alphabet posts lower Q4 earnings amid advertising pressure and competition
