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Ad Revenue of Alphabet Spirals in Face of YouTube Backlash

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Published on : Feb 02, 2018

Despite a crisis of trust faced by YouTube, Google has been able to continue to improve its ad business, which is evident from its handsome earnings in Q4 2017. Alphabet, Google’s parent firm, has grown its profits by a US$7.7 bn or 15.0%, whereas the revenue has soared from a US$26.0 bn to US$32.0 bn. However, the parent firm has netted below expectations as per earnings per share, i.e. at a US$9.70. Nevertheless, the tech giant has sent its stock down in aftermarket trading while securing a tax provision of US$11.0 bn. Google’s ad business has an 84.0% share in its parent firm’s total revenue and has grown from by a 21.0% from the last year.

Analysts Point Out Alphabet’s Strengths beyond Advertising

Alphabet’s cloud platform has now been able to generate a US$1.0 bn per quarter in revenue while competing against Microsoft and Amazon. This has shown that the company’s spread out beyond Internet search has begun to yield good results. With Facebook as its closest challenger anticipated by prominent analysts to claim a 23.0% of the digital ads market in the U.S., Google has been predicted to gain a superior share of 42.0%. Clearly, Google has not lost its grip on online advertising despite YouTube’s troubles.

Alphabet has expanded its strength beyond advertising, positioning itself well for developments in important domains such as cloud computing, machine learning, and mobile. However, increasing threat of government intervention and enlarged regulations in the U.S. and Europe may put Google’s bottom line to risk. The company had been fined a US$2.7 bn by the antitrust chief of the European Union last summer for directing users to its comparison shopping website.