Alphabet: revenue soared for Google owner as Covid brought more people online – The Guardian


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Google’s parent company, Alphabet, reported record profits for the second consecutive quarter and a 34% jump in revenues but warned bumper traffic and ad sales during the pandemic may slow as stay-at-home measures are eased.

Exceeding Wall Street’s expectations, Alphabet brought in just under $18bn in profits, and $55.3bn in revenue in its first quarter of the year, a 34% rise from the same time a year ago.

The results provided the first sign that Google services such as search and YouTube may hold on to gains made since lockdowns and other pandemic restrictions forced people to shop and communicate online over the last year. Google’s ad business, the global market leader as measured in sales, accounted for 81% of Alphabet’s first-quarter revenue.

Alphabet chief financial officer Ruth Porat told analysts on Tuesday that it was “too early to forecast the extent to which these changes in consumer behavior and advertising spend will endure.”

However, nearly $4bn of earnings came from paper gains on shares in venture capital investments and accounting changes on the book value of its equipment.

Google’s CEO, Sundar Pichai, said during an earnings call on Tuesday that Alphabet will also invest $7bn in offices and data centers and will add 10,000 full-time jobs, as the company continues to prioritize its sustainability efforts.

He also said the top priorities going forward include building and providing helpful parts and services, increasing user trust by keeping data safe and private, reopening their offices effectively, and building sustainable value for the business and partners.

“In some parts of the world the economy began to rebound, which created a rising tide in the first quarter,” Pichai said, adding that investments in startups are at an all-time high. “Thank you to our Googlers around the world for a great start to the year,” he said.

While they celebrated the successes and opportunities for continued growth the executives were also quick to emphasize that the future is still uncertain, especially when it comes to changes in consumer behavior that came along with the Covid crisis.

“It is too early to say how durable this consumer behavior will be,” Ruth Porat, CFO, said during the call, noting that a bump in consumption also came as workers outfitted their homes to work remotely. She added that year-over-year comparisons will probably be affected by the unique circumstances.

The company ended the 2020 fiscal year on a high note – after suffering the weakest revenue growth in close to five years in the first quarter of last year – announcing in February that a rebound in ad spending over the holiday season spurred a 23% rise in sales.

Despite the successes shared Tuesday, the company is still facing obstacles on several fronts. Google continues to face fallout in a spate of controversies – including federal inquiries and allegations of anticompetitive business practices and issues with diversity and discrimination.

In October, the company was hit with landmark civil antitrust lawsuits brought by the US Department of Justice and a coalition of states, which allege Google maintained “monopolies through anticompetitive and exclusionary practices in the search and search advertising markets”.

In February, the company announced Google would pay a $2.6m settlement to more than 5,500 employees and applicants who had allegedly been subject to discrimination as female engineers or Asians, in California and Washington state.

The company has also had to address internal turmoil over its scientific ethics, after coming under fire for how managers review Google’s scientists’ work. In December, Timnit Gebru, a prominent Black scientist, wrote on Twitter that she was fired by Google after she pushed back against the company for trying to suppress her research on the ethics of artificial intelligence. Within months, another member of Gebru’s AI ethics team was let go, escalating the issue.

Executives have also had to make regular appearances on Capitol Hill, and have been called to testify in front of the Senate judiciary antitrust subcommittee.

Last week, a number of smaller apps, including Spotify, Tile and Match, told legislators that Google and Apple “hold data hostage” to stifle their competition. Senator Amy Klobuchar, the Democratic chair of the subcommittee, agreed and said the tech companies “exclude or suppress apps that compete with their own products” and “charge excessive fees that affect competition”.

“The only way apps can get to consumers is through one of these two platforms, which are owned by just two companies,” she said. “The best thing to do here would be to admit that we have a huge monopoly problem across the board, and put in some stiffer rules and standards to address it.”

The Associated Press contributed reporting

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