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Google has a problem with YouTube, according to CFO Ruth Porat.
On Monday, after announcing a 15% increase in advertising revenue compared to the 24% recorded last year, Alphabet, Google's parent company, saw its action punished. It fell more than 8% Tuesday afternoon.
According to Porat, YouTube was one of the culprits.
"While the number of YouTube clicks continues to grow at a steady pace in the first quarter, its growth rate has slowed from the first quarter of last year, reflecting the changes we made early in 2018. and which, in our opinion, add to the overall user experience of advertisers, "said Porat about announcing the company's results Monday.
Porat has not explained in detail what changes on YouTube have led to low advertising revenue growth, and Google is saying nothing beyond its Monday statements.
But if you go back a year, it's easy to see what happened.
In the first quarter of 2018, Google began modifying YouTube's algorithms designed to prevent harmful content from appearing in the recommended video feed that you see on the side of a video page.
The goal was to make it more difficult to search for videos full of conspiracy theories, false information and all the other detritus that sometimes sent advertisers fleeing the platform. Instead of pointing you to a conspiracy theory about the latest school shootout, YouTube showed you videos of "trustworthy" sources considered worthy of providing you with accurate information.
In addition, YouTube has removed millions of channels and videos that violate the company's prejudicial content rules, including Alex Jones.
But all these waste videos have also kept the commitment high. This allowed YouTube users to listen to their feeds beyond the video they had just watched, even though the company claimed to represent less than 1% of all videos on the site.
YouTube has been literally urged to keep its algorithms that place garbage at the top of the consumer's diet so that internet users continue to watch and that ad revenue continues to flow. A devastating report from Bloomberg, released this month, showed that for years, YouTube executives had ignored the warnings of their own employees that misinformation and wickedness on the site had become out of control.
For a long time, they chose money rather than managing chaos.
Today, YouTube says it is serious to fix the issues that have affected the site for years. But this cleaning seems to have been done at the short-term costs of advertising revenue growth. (Although it is possible that Porat may refer to other types of changes or engage in selective disclosure to guide investors to other reasons for slowing growth.)
Investors punished the company Monday by evaporating more than 70 billion dollars of its market capitalization.
But if YouTube can solve its content problems and continue to grow beyond its two billion users, it will benefit in the long run.
The new system is still far from perfect, as Kevin Roose of the New York Times pointed out in an interview with YouTube product manager, Neal Mohan. It's still possible to fall into a horrible rabbit hole on YouTube. But according to Porat's comments, the changes have been effective enough to hinder YouTube's participation.
Still, analysts did not seem too worried about YouTube's long-term prospects and warned that other factors were affecting the slowdown in advertising growth.
"YouTube has put more emphasis on accountability and security, and it has adjusted its algorithm in the first quarter to reduce content recommendations that approach misinformation or misinformation." or damaging, "JP Morgan analysts wrote Tuesday morning. They added that "we do not think that there is a single clear answer for Google [deceleration]but a number of factors are at work. "
While the market capitalization of billions of dollars has disappeared and analysts are already degrading the actions of Alphabet, the biggest question now facing YouTube is whether it will continue to improve the fight against the dissemination of content toxic or will remain inactive for the benefit of its shareholders.
Fixed: An earlier version of this story was linked to the wrong YouTube blog post announcing changes in content moderation.
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