Despite Fines and GDPR Concerns, Google-owned Alphabet Records Strong Revenue Growth

Alphabet, a Google-owned company, registered a second quarter revenue of $32.7 billion, a 26% jump from the same period last year according to its earnings report issued recently, regardless of being subjected to a $5bn EU fine and further worries in relation to the General Data Protection Regulation (GDPR),

Google CEO Sundar Pichai advised investors that the advertising platform is “firing all cylinders,” with advertising revenue rising to $28.1 billion in Q2 2018, compared to $22.7 billion during the same period in 2017.

Alphabet stock had fallen marginally following the European Union levied a $5 billion fine against Google. Despite this fine, and possible further scrutiny under GDPR, this is the second consecutive quarter where Google-owned media was responsible for a disproportionate share of Alphabet’s revenue growth. Publishers recorded in the Google network saw about $600 million more than during the same time period in 2017, while Google properties rising revenue by up to $5 billion.

Google’s TAC (Traffic Acquisition Costs), as a percentage of total advertising revenue, climbed to 23% from 22% in 2017. Pichai and CFO Ruth Porat warned investors that the percentage will go on rising for the foreseeable future, as mobile search has higher acquisition expenses.

Pichai would not speculate on GDPR implications and the methods that the company will use to address the concerns regarding the new EU regulation. He stated: “It’s super important to get it right. It’s been a big change for a lot of our partners as well, so we’re working closely with partners and regulators, but it’s too early to tell.”

He also would not comment on possible amendments to the Android operating systems after the EU antitrust commission charged Google last week with infringing on other search services by pre-installing services including Chrome browser and the Play Store on smartphones.

On a conference call for investors Ruth Porat, chief financial officer of Alphabet and Google, stated: “Our investments are driving great experiences for users, strong results for advertisers, and new business opportunities for Google and Alphabet. We’re pleased with the ongoing momentum in our advertising businesses”.

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