Google profits soar despite $5B antitrust fine

Jul 25, 2018, 03:01
Google profits soar despite $5B antitrust fine

As for the EC fine, the European Commission charged Google $5.07 billion for breaching EU antitrust rules by imposing restrictions on Android device makers and network operators "to cement its dominant position in general internet search".

Which brings us, of course, to Google. YouTube, a Google-owned streaming service, has increased spending on video content to keep consumers from shifting to offerings from Netflix Inc and expanding media conglomerates such as AT&T Inc. During the three month period, Alphabet recorded total revenues of $32.7 billion.

"There was never a question about Google's dominance of a buoyant digital ads market", said analyst Richard Kramer of Arete Research.

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The sums Google pays out to websites and mobile partners to distribute its search engine and ads - called Traffic Acquisition Costs - also rose to US$6.4 billion for the quarter.

"Google has to make sure their advertising clients are happy with the placement of their ads", he told Cheddar after the results. Google's Other revenues -which now includes the smart thermostat business Nest - were $4.23 billion. According to Commissioner Vestager, Google had sent its letter about a year too late. Without the approx $5 billion European Union fine, Alphabet would have reported earnings of $11.75 a share. The largest Ad Revenue-based 'Net business has now averaged 23% growth for 34 (count 'em) straight quarters & shows no signs of slowing.

"Google reported a high-quality quarter in which the bulk of the top line outperformance vs. CS came from Websites (ongoing strength in mobile search, YouTube, as well as desktop search) followed by Network revenue (AdMob and programmatic)", the analyst Stephen Ju said.

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Similarly, analysts don't expect European Union antitrust probes to force changes that significantly dent Google earnings. That was a little hire than the Thomson Reuters consensus estimate of $32.17 billion. Some analysts excluded other items as well, and Alphabet also beat that consensus of $9.59. The "Other Bets" segment of various startup and moonshot endeavors had higher revenue this quarter, $145 million, but grew its operating loss to $732 million at the same time.

'Our investments are driving great experiences for users, strong results for advertisers and new business opportunities for Google and Alphabet'.

As usual, Alphabet will be holding a conference call with CFO Ruth Porat and Google CEO Sundar Pichai at 4:30 PM ET, and we'll be updating this post with any additional information the company shares. That said, it's worth considering that if Google continues to run into trouble with the government, such fines could continue to impact the company's business.

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