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Alphabet, Google's parent company, has been affected by the record fine of 4.34 billion euros recently imposed by the EU for the dominant position of its Android operating system, which is used by 85% of smartphones, but it did not stop its growth engine: advertising
Net income fell by 9.3% to $ 3.2 billion in the second quarter, mainly because of this sanction, of which Google will appeal. Aside from the penalty, the internet giant made a profit of $ 8.26 billion.
The EU, which had the operating system in the crosshairs for months, gave the group 90 days to put end to its "illegal" practices.
"We are looking for a solution that preserves big benefits for Android users," Google CEO Sundar Pichai said Monday in a conference call with badysts
Google continues to rely on advertising despite new rules on the protection of private data in Europe. Quarterly sales jumped 25.5 percent to 32.66 billion, mainly driven by a 24 percent surge in advertising revenue. This amounted to $ 28.08 billion.
"We had another strong quarterly performance," said Ruth Porat, chief financial officer. "Our investments provide good user experiences, lead to strong results for advertisers and new business opportunities for Google and Alphabet," she continued.
On Wall Street, the title jumped 3 , 6%, to 1,254.12 dollars, a record high, in the electronic exchanges following the close of the session, the investors hailing the control of the expenses and the costs which allowed to limit the impact of the fine of the EU
Announcements in the "cloud" Tuesday
Advertising acquisition costs (TAC), an element that is highly scrutinized by the markets because they determine margins, have certainly increased , to reach $ 6.42 billion, but represent 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.
TACs are the sums donated by Goog for example, to make sure that it is the default search engine for devices or operating systems.
These "are below expectations, which is clearly a positive sign", Dan Ives, an badyst at GBH Insights, said he expects a sharp rise in these costs before moderation only at the end of the year.
In addition to costs and antitrust investigations, Google faces risks from determination of the public authorities to regulate further the use of personal data.
The measures taken on both sides in this framework are likely to slow down its growth as well as that of its rival Facebook, the economic model of the two groups being based on data from their users that allows them to target advertising very finely.
The European Data Protection Regulation (GDPR), in force since 25 May, requires them to obtain the approval of interns to collect their data and send them targeted advertising.
"It's still a little too early to measure the impact of this big change, because it's also a big upheaval for our partners," said Sundar Pichai
The RGDP could, however, help strengthen the Google-Facebook duopoly in Internet advertising, where the two groups together represent more than 56% of the market, according to eMarketer, warn some experts.
besides advertising, other potential sources of revenue for Google are also highly observed, like devices (speakers connected Home, Pixel phones), the cloud or cloud computing, artificial intelligence and Waymo, the subsidiary specialized in the development of autonomous technologies for the automobile
The revenues of the activities including Waymo and the division of sciences Verily increased by 49%, but the operational loss it was dug to 732 million dollars.
The deal could change in the coming months, because Sundar Pichai said Monday that Google was going to make announcements in the "cloud" Tuesday. Waymo has also made "big progress" as the first autonomous cars are expected on American roads in 2019.
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