Ad revenue bounces back for Google parent Alphabet as it gears up for antitrust case

The market dominance will do little to quell US authorities’ fears that Google, along with fellow tech giants, are operating monopolies.

Google parent company Alphabet’s share price jumped on Friday when it released financial results that crushed analysts expectations, including a return of advertising dollars that had dipped for the first time during the pandemic.

For the quarter ending September 30 the advertising and search giant reported more than US$37 billion in advertising revenue, up more than US$3 billion on the same period a year ago, thanks to big lifts in Youtube and search ads.

Google’s adtech business, cloud and hardware revenue also increased last quarter, bringing total revenue to over US$46 billion.

Ad revenue declined for the first time in Q2 when advertisers around the world paused or reduced spending as COVID-19 effects took hold. But fears of a crunch did not eventuate for Google with search and “other” advertising up six per cent on a year ago while Youtube ad revenue jumped 32 per cent.

“Overall, we’re pleased at the degree to which advertisers really have reactivated their budgets in the third quarter and they’re reacting in part to I think evidence that consumers are showing strong demand across nearly all verticals,” said Google and Alphabet SVP and CFO Ruth M. Porat.

The market dominance will do little to quell US authorities’ fears that Google, along with fellow tech giants, are operating monopolies.

Antitrust updates

Earlier this month the US Department of Justice and several State Attorneys Generals filed a civil antitrust lawsuit in a US District Court to stop Google from unlawfully maintaining monopolies through anticompetitive and exclusionary practices in the search and search advertising markets.

Google says the action is “deeply flawed” and its position and products create a benefit to consumers.

On an earnings call on Friday, Google CEO Sundar Pichai primed analysts in his opening remarks by saying Google’s success in search – a market it holds more than 92 per cent market share – is “not guaranteed”.

“We are proud that people choose Google Search not because they have to, but because it’s helpful. We remain committed to investing to build the most helpful, most trusted search experience, just as we have for the last 22 years,” Pichai said on the call.

Pichai said Google will “confidently make our case” with the DOJ that its products create a significant consumer benefit despite dominating the market.

Asked the rising tide of tech regulation, Pichai said scrutiny was nothing new for the tech giant.

“In some ways it’s [scrutiny] now sectorwide and not surprisingly so. You know we will engage constructively where possible, and as we have shown through some of the past cases, when there is — we’re confident about the benefits we bring to our users, we’ll make our case.

“Where there is feedback or rulings, we’ll be flexible and adapt and so we are building that into it.”