Google’s advertising downturn persists and weighs on Alphabet’s first-quarter results. Alphabet Inc., the corporate parent of Google, reported a 3% increase in total revenue for the January-March period, benefitting from growth in its cloud computing division. However, Google’s ad sales of $54.5 billion marked a slight decrease from a year ago, which followed a nearly 4% decline in the last three months of 2020 – making it the first time since the company became public in 2004 that it recorded back-to-back drops in year-over-year ad revenues. To make matters worse, YouTube’s ad sales decreased 2.5% from last year, marking its second consecutive quarter of erosion.
Alphabet’s earnings were adversely affected by the ad woes and an unprecedented $2 billion in charges for due to layoffs and other cost cutting. The company’s total revenue for the quarter came in at $69.8 billion, but its earnings decreased 8%, to $15.05 billion, or $1.17 per share. Although Alphabet’s results exceeded analysts’ expectations, its stock fell 15% this past year due to Investor concerns regarding the future of its ad business.
Google is currently facing a tougher market due to a decrease in consumer spending due to rising inflation, as well as higher interest rates that could potentially result in a recession. Making its challenges greater, the company is facing a new external threat in the form of ChatGPT, an artificial intelligence chatbot developed by Microsoft which is integrated into Bing search engine – a potential obstacle for Google Search’s dominance. In response, Google is developing its own alternative, Bard, with limited capabilities to prevent user or advertiser dissatisfaction, as well as from spreading false information.
Google has been the largest internet organization in the world for over two decades, with over 190,000 worldwide employees, and estimated market cap of over $1 trillion. Established in 1998, the company has become one of the most innovative and valuable companies in the world by providing products, services and platforms such as Google Cloud, Google Voice and Google Maps.
Its CEO, Sundar Pichai, is an Indian-born business executive who took the position of lead of Google in 2015. He is known for his innovative approach and strong leadership, pushing the boundaries of technology. In addition to Alphabet, Pichai led the development of new products and partnerships, including Waymo driverless cars and Google’s acquisition of YouTube. His efforts have contributed to Google’s unparalleled success and raised his reputation and wealth in the tech industry.
