Taking into account the massive fine, its second-quarter profits slid to $3.5bn from $4.9bn for the same period a year ago. Revenue was up 21% in the second quarter compared to the year before, at $26bn. Or in other words, after several years of investigating Google, even a record fine was still only roughly a tenth of a single quarter's earnings and just over half the profit it had made in the quarter before the sanction was announced.
Let's not forget this was also the time when all the media headlines were about a huge backlash against Google's YouTube service. It was accused of allowing big-name advertisers to pay money to have their messages next to extremist content and the moral outrage was palpable. Trouble is, revenue just kept going up year-on-year.
The list of brands that were dropping YouTube read like a who's who of global advertisers and their agencies. Many thought the duopoly of Google and Facebook would be challenged by the big spenders finding alternative sources to advertise on. The trouble is, they may well have done this, but YouTube and Google hardly noticed. One smart observer commented on a previous London Blog that this is because much -- if not a majority -- of Google's advertising revenue comes from self-service SME accounts. Small companies with no agency are happy to keep throwing budget at AdWords and PPC search to promote their businesses.
The result? Take a look at the share price of Alphabet, Google's parent company. You can add a time frame of whatever you like and the line just keeps going up and up to the top right-hand corner -- it has more or less trebled over the past five years and has gone up by nearly 50% over the last year alone.
Remember, this is the year when what most have been its two worst fears have come to pass. An investigation by the European Commission led to a record fine and the big guys in advertising publicly dropped it over links to extremist content.
All this, and it keeps on going from strength to strength. It has way too many users for a couple of dozen brands the whole world has heard of to make a massive long-term difference, and it simply earns too much to be bowed by a record fine from an economic bloc the size of the EU.
Google is untouchable. As one half of the duopoly whose growth the world's brands and publishers are hoping to control, it's hard to see how it can be challenged when a boycott and a trading bloc can do their worst and it emerges with higher earnings and a temporary blip in a quarter's figures.
A multibillion-euro fine has taken a significant bite out of the bottom line at Alphabet, with the parent company of Google unveiling a second-quarter profit last night down by more than a quarter compared with last year.
Alphabet was fined a record €2.4 billion by the European Commission in June for illegally favouring its own shopping search service ahead of its rivals’. The competition regulator ruled after a seven-year investigation that Alphabet had abused its dominance as the world’s most popular search engine to give an unfair advantage to Google Shopping.
Alphabet’s second-quarter profit fell to $3.5 billion from $4.9 billion in the same period a year ago, reflecting the impact of it taking a charge for the fine.
The company has said it is considering an appeal but Ruth Porat, chief financial officer, said it was still early in its analysis of the penalty.
Revenue rose to $26 billion from $21.5 billion, beating analysts’ forecasts but Alphabet’s shares fell, nonetheless, by 2.4 per cent to $974 in after-hours trading in New York. Ms Porat said mobile search was the biggest contributor to Alphabet’s growth.