The looming threat of daily fines of up to 5 per cent of Alphabet’s worldwide revenue hasn’t scared away investors.
Google’s parent company Alphabet reported its second quarter results overnight, just days after being slapped with $5 billion (AU$6.85 billion) antitrust fine from the EU which took aim at its Android operating system.
The company’s share price was 5 per cent higher following the release of better than expected results.
Total revenue increased 26 per cent to US$32.7 billion and net income rose to US$8.3 billion. Those results exclude last week’s European Union fine, taking into account the fine, net income was US$3.2 billion.
On a call between analysts and Alphabet executives, the search giant reiterated it plans to appeal to EU fine,which as it currently stands, requires Google to change its business practices within 90 days to comply with antitrust rules or face further fines of up to 5 per cent of Alphabet’s daily worldwide turnover.
“We are analysing the decision, and I think it’s too early to comment or speculate beyond what you’ve already said. But we will — we will always take a constructive approach. We’ll appeal the Commission’s decision and take the due process available to us. But, we are also looking forward to finding a solution above all that preserves the enormous benefits of Android to users and so on,” a Google spokesperson said.
Google’s ad revenue continues to surge, hitting $28 billion for the quarter, up 23.9 per cent. Ruth Porat Alphabet CFO said the results were led by mobile search “with strong contributions from both YouTube and desktop search.”
Traffic acquisition costs – the money Google pays affiliates like for directing traffic to its services – rose 26 per cent from $5.1 billion a year ago to $6.4 billion, or 23 per of Google’s advertising revenues.
The ‘other category’ which includes company’s cloud business and hardware revenue increased 36.5 per cent to reach $4.4 billion.
‘Other bets’ – Alphabet’s moonshot division which includes self driving car business Waymo – made $145 million for the second quarter, while its losses widened from $633 million during the same period last year to $732 million.