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A record fine but an activity that continues to be best. A week after the painful € 4.34 billion inflicted by the EU for abuse of dominant position, the results of Alphabet, the parent company of Google, were eagerly awaited. And the least we can say is that the advertising machine, almost exclusive engine of growth, continues to run at full speed. Net profit fell by 9.3% to $ 3.2 billion (2.7 billion euros) in the second quarter, mainly because of this sanction. Google will appeal. Apart from this penalty, the Internet giant does not release a quarterly profit of $ 8.26 billion. Almost twice the amount of the fine
Pub still rising
Google continues to rely on advertising despite the new rules on the protection of private data (RGPD) recently come into force in Europe. Quarterly sales jumped 25.5 percent to $ 32.66 billion, mainly driven by a 24 percent surge in advertising revenue. These total $ 28.08 billion. "We recorded a very strong quarterly performance" welcomed the financial director, Ruth Porat, according to which the investments of the group "provide good experiences to the users, lead to solid results for advertisers and new business opportunities for Google and Alphabet ".
Advertising acquisition costs (TAC), a key element from which the margins of the multinational are appreciated Mountain View, Silicon Valley, continued to grow as in previous quarters, reaching $ 6.42 billion. But they account for only 23% of Google's advertising revenue compared to 22% in the second quarter of 2017 and 23.6% in the first quarter of the current year. Stability is in order. These "TACs" correspond to amounts paid by Google to third parties to ensure, for example, that it is the default search engine for devices or operating systems. These "are below expectations, which is clearly a positive sign," welcomed Dan Ives, badyst at GBH Insights quoted by AFP, who expected a sharp rise in these costs before a moderation expected only at the end of the year
RGPD and Android
The company must also face new regulatory risks related to the action of the public authorities to further regulate the use of data personal. The measures taken in this context are likely to slow down its growth and that of its rival Facebook, the economic model of the two groups – unlike those of Apple and Amazon – being based on the monetization of user data to their send the most finely targeted advertisements. The European regulation on data protection (RGPD), in force since May 25, now requires them to obtain the approval of Internet users to collect their data and send them targeted advertising.
"It is still a little too early to measure the impact of this big change, because it is also a big upheaval for our partners " told Sundar Pichai. According to the firm eMarketer, the RGDP could also help strengthen the duopoly Google-Facebook in the Internet advertising where the two groups together attract more than 56% of the investment of advertisers.
Cap on the autonomous car [19659009] Other potential sources of revenue are also closely watched, like the various Google products (home connected speakers, Pixel phones), the cloud (storage and hosting of data and software), office tools, artificial intelligence and Waymo, the subsidiary specialized in the development of technologies for the autonomous car. Revenue from activities including Waymo and the Verily Science Division increased by 49%, but the operating loss was increased to $ 732 million. Waymo also made "big progress" said the financial director Ruth Porat, while the first autonomous vehicles are expected on US roads in 2019.
Sundar Pichai, who said that Google was going to make announcements in the very promising sector of the "cloud", besides indicated that the company "thought to find a solution in order to preserve the enormous benefits that Android brings to its users" . In its decision released last week, the EU said it was giving the group 90 days to end its "illegal" practices and make corrections to its mobile operating system (85% market share in smartphones and 1.24 billion mobile phones sold in 2017), otherwise it could impose financial penalties of up to 5% of the average daily and global turnover from that date. A risk much more significant than the 4.34 billion euros fine already imposed on Google by the European Commission.
Christophe Alix
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