Alphabet revenue disappoints as YouTube ad sales fall

30/04/2019

Google's parent company, Alphabet missed revenue forecasts as it was impacted by a fine from the European Commission for blocking rival online search advertisers.

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Alphabet, which also owns YouTube, reported $36.3bn (£28bn) in sales for the first quarter, below expectations of $37.33bn.

The company said total revenue was up 17% - the slowest rate for three years. Profits also fell during the three months to 31 March.

Google had to pay €1.5bn (£1.3bn) in fines by the EC after it was accused of abusing its market dominance by restricting third-party competitors from displaying search adverts between 2006 and 2016.

Net income, a bottom line profit figure, was $6.7bn compared to $9.4bn a year earlier.

The figure included, the company said, the impact of the $1.7bn fine imposed by the European Commission for anti-competitive advertising restrictions on websites using Google's search widgets.

Costs hit almost $30bn - a rise of 17% - as it continued to spend big on things like data centres.

Other pressures have included scrutiny on the company's privacy practices and efforts to restrict advertising on potentially offensive content.

Alphabet revealed staff numbers had rocketed, with the company employing over 103,000 at the end of the reporting period compared to 85,000 12 months earlier.

One of the key metrics analysts and investors were looking for was the operating margin - key to profitability.

That figure came in at 18% compared to 25% a year ago.

Alphabet, the world's largest seller of internet ads, cited weaker paid clicks growth as being among the challenges but said there was much to cheer overall.

It does not break out performances by brand, such as YouTube.

Ruth Porat, chief financial officer, said: "We delivered robust growth led by mobile search, YouTube, and Cloud with Alphabet revenues of $36.3bn, up 17% versus last year.

"We remain focused on, and excited by, the significant growth opportunities across our businesses."

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