alphabet reuters 1674211256407

Google parent Alphabet on reported a drop in profit in the fourth quarter of last year and a small increase in revenue, as a drop in online ad spending and competition from rivals weighed on the search giant.

While overall revenue was up, ad revenue was down nearly 4%, with YouTube’s revenue down 8% year-over-year. That seemed to spook investors, who pushed the company’s shares lower in after-hours trading.

The Mountain View, California-based company said it earned $13.62 billion (roughly 111.94 billion rupees), or $1.05 (roughly 90 rupees) per share, in the October-December quarter. This is down 34 percent from $20.64 billion (Rs 1,697.87 crore) or $1.53 (Rs 90) per share in the same period last year.

Revenue edged up 1 percent to $76.05 billion (Rs 625,598 crore) from $75.33 billion (Rs 619,675 crore).

Analysts expect Alphabet to post earnings of $1.18 (roughly Rs 100 crore) per share on revenue of $76.2 billion (roughly Rs 6,268.49 crore) for the period, according to FactSet Research.

Like Facebook parent Meta, Amazon and other tech companies, Alphabet is struggling with an economic woes that have been especially bad for the online advertising market.

Last month, Alphabet announced it was cutting 12,000 jobs, or about 6% of its workforce. It’s the company’s largest round of layoffs to date, with Microsoft, Amazon, Meta and other tech companies recently announcing tens of thousands of layoffs as they tighten their belts amid a gloomy industry outlook.

In response to the layoffs, Google’s unionized employees, members of the Alphabet Workers Union-CWA, rallied outside the company’s New York City offices during the company’s earnings call.

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“Alphabet is one of the most profitable companies in the world, able to weather any economic storm. Yet our executives decided to lay off 12,000 of our colleagues, including many who took sick or parental leave, and many who had served the employees,” the union said in a statement.

Alphabet CEO Sundar Pichai said Alphabet was navigating a “challenging” economic environment and was working to redesign its cost structure to build a “financially sustainable, dynamic growth business”.

“Our long-term in deep computer science positions us exceptionally well as AI reaches an inflection point, and I’m excited about the AI-driven leaps we’re about to unravel in search and beyond,” Pichai said in a statement. statement.

Google faces some competition in the AI ​​space from Microsoft, which last month announced a “multi-year, multi-billion dollar investment” in AI startup OpenAI, the popular ChatGPT and other AI-readable AI software. Maker of the text and generated tools. new image.

The technology could help Microsoft’s own search engine, Bing, compete with Google by answering search queries with more complete answers rather than just links.

Pichai also touted “strong momentum” in cloud computing, YouTube subscriptions and Pixel devices, showing investors that Alphabet has ample revenue streams outside of advertising to grow its business.

Still, advertising still accounts for the majority of Alphabet’s revenue.

In addition to the economic crunch, Google is also facing regulatory pressure. Last month, the Justice and eight states filed an antitrust lawsuit against Google in an attempt to break up its so-called monopoly over the entire online advertising ecosystem, arguing it is a harmful burden on advertisers, consumers and even the U.S. government.

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The government said in the complaint that Google is seeking to “neutralize or eliminate” competitors in the online advertising market through acquisitions and to force advertisers to use their products by making their products difficult to use.

Alphabet shares fell about 4% in after-hours trading after the company’s earnings report.

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By Rebecca French

Rebecca French writes books about Technology and smartwatches. Her books have received starred reviews in Technology Shout, Publishers Weekly, Library Journal, and Booklist. She is a New York Times and a USA Today Bestseller...