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The day Google was overwhelmed by concerns over the treatment of its allegations of sexual misconduct, Alphabet, its parent company, reported a profit of $ 33.7 billion in the third quarter.
The results met expectations of continued growth despite controversy surrounding a recent data breach on the company's social network, Google+.
Ruth Porat, chief financial officer, said revenue growth was up 21 percent over the same period last year and had a $ 8.3 billion profit, thanks to good performance. from Youtube, Cloud, as well as computer and mobile search.
The results came when the New York Times announced that Google had awarded its former executive Andy Rubin a severance pay of $ 90 million, while concealing the details of an allegation of sexual misconduct at the company. Origin of his departure.
The company's chief executive, Sundar Pichai, sent a letter Thursday to staff after the publication of the New York Times article, insisting that the company adopt a firm stance regarding the allegations of the company. sexual misconduct, revealing that 48 people, including 13 senior managers, had been fired. the last two years.
However, the problem was not mentioned in the call for results. Critics have called for stronger government oversight and regulation of technology companies and a crackdown on the monopolies they hold.
"It's exciting to think that we're still 20 years old in what we can do," Pichai said during the call, describing the areas that have allowed the company to benefit from a solid quarter.
He detailed how Google's hardware devices, the products of continuous development such as search and mapping engines, and the cloud have helped the company continue to grow. He also said that the subscription services had a positive impact and that they gave priority to Google News to ensure the highlighting of "credible sources of information".
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Alphabet comes from Google Properties to more than 70%, and analysts had predicted that the technology giant was heading towards the third quarter on a positive note, even after the controversy over a data breach had caused the closure of the social network Google, already underperforming, Google+.
Earlier this month, Google was ranked among the two most important brands by Interbrand, a global brand consulting company that publishes an annual report based on its relevance, responsiveness and presence. In the report, Google valued $ 155 billion. It is in the top three of the last six years and shows a continuous and considerable growth.
But in early October, the Wall Street Journal revealed that third-party developers were able to access information from nearly 500,000 accounts and that Google executives knew the bug in its API (program interface). application) since early spring.
In a blog post published in response to the article, the company said the developers were not aware of the bug and that they had not found any evidence of it. misuse of profile data. They announced, however, that they would always close Google+ to strengthen data protection. .
"Given these challenges and the very low usage of the consumer version of Google+, we decided to disable the consumer version of Google+," wrote Ben Smith, Google, adding that the consumer side of the platform would disappear slowly over the next ten months. month.
Scott Galloway, a professor at the NYU Stern School of Business, said it was not surprising that this decision does not turn into a financial disaster this quarter, especially given the poor performance of Google+. .
"They were looking for an excuse to close it," he says. "To connect this problem to the closing of the platform was an illusion."
Galloway pointed out that, even though the data breach was controversial and consumer concerns, it did not affect the financial perspective. "These scandals made a lot of headlines, but they did not have an impact on business performance," he said, explaining that government intervention was the only thing that could slow down Alphabet.
"The risk for shareholders is that the specter of regulation becomes increasingly realistic at a given moment given the frequency with which these companies are exploding on their own," he added.
"Monopolistic Internet platforms such as Google and Facebook are probably too big to be secure and blind," said Jeff Hauser of the Center for Economic Policy Research at the Guardian after the revelation of the data breach that had occurred earlier in the month, adding that the US Federal Trade Commission should dismantle the platforms.
At an international conference this month in Brussels, Apple President Tim Cook announced his support for increased government oversight of privacy.
On Thursday, Pichai insisted that Google "has always approached our products with a goal of solid privacy for our users."
Across the United States, steps have already been taken to enact regulatory laws, following the adoption of large-scale legislation in the European Union. In June, California passed its own digital privacy law, prompting technology companies lobbyists to start asking the federal government to draft more favorable rules.
Despite everything, Alphabet has shown that it is strong enough to withstand great regulatory success. During the last quarter, closed in June, Alphabet announced that its profits had fallen after an unprecedented $ 5 billion fine from the European Union. The company has always challenged expectations with a turnover of $ 32.6 billion and a profit of $ 2.8 billion. According to experts, the upward trend will continue unless regulators take even more ambitious measures.
"From an investor's point of view, you're stupid not to own those stocks," Galloway said. "This company has incredible earnings power – because it's great to be a monopoly in a growing economy. The only thing left between Google and continued growth is the government. "
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