“Google is not immune to economic headwinds.” Earlier this month, the company’s CEO, Sundar Pichai, warned his employees that global turmoil would affect his business. And so it has been. His parent company, Alphabetannounced on Tuesday a net profit of 16,000 million dollars in the second quarter, which represents a fall of 14% in relation to the previous year, falling below what analysts had forecast.
The tech giant posted revenue of $69.7 billion, an increase of 13%. The results show that Google’s search engine business, a market that dominates with an iron handresists slowdown economy and to the increase in inflationsome uncertainties that do affect other company businesses affected by the drop in online advertising, as is the case of Youtube.
Ruth Porat, Alphabet’s chief financial officer, has warned that the company’s profits have been hurt by rising investment costs to build new data centers and hire more staff. This slowdown, according to the company, is also due to the comparison with the second quarter of 2021, when they grew as a sign of recovery after the impact of the coronavirus crisis.
advertising business
However, sales of advertisements in the Google search engine grew more than 13%, to 40.7 billion dollars, a higher increase than expected by analysts.
The technology sector is also being affected by nail Unflattering macroeconomic conditions marked by inflation and the slowdown in the global economy, accentuated by the war in Ukraine and the covid pandemic. All this makes one fear recession.
These problems influence the budgets of the advertising, key to Google’s business. And is that 81% of their profits depend on ads. During the second quarter they have accounted for about 40,700 million dollars in revenue.
Youtube, also owned by Alphabet, has noted this drop in advertising. Thus, its advertising revenue grew by 5% during the second quarter, which represents a setback compared to the 14% increase registered during the first three months of the year.
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On the other hand, the services Cloud Computing of Google generated about 6,200 million in income, although the division suffered a loss of 858 million, something typical. Google is still behind Amazon and Microsoft, leaders in that important market.
The new data shows that the owner of Google now has 174,014 employees, 10,000 more than in April. However, these economic uncertainties have led the company to announce that it will slow down the hiring of personnel, the same course that other heavyweights in the sector have taken.