Google reports $10.4bn profit in Q2

The search giant continues to report colossal profits in the face of increased regulatory scrutiny.

Google: EMEA revenue EMEA revenue was up 15%
Google: EMEA revenue EMEA revenue was up 15%

Google’s parent company Alphabet has reported a 19% revenue jump to $38.94bn (£31.33bn) for the second quarter, which it said is driven by ongoing strength in mobile search, YouTube and its cloud business.

Advertising revenues increased 16% year-on-year to $32.6bn.

Alphabet reported profits of $9.18bn in the second quarter of 2019, a 201% hike from its $3.05bn operating income in Q2 2018. However, the 2018 quarter was impacted by Google’s $5.07bn fine from the European Commission for breaking antitrust laws.

Google's profit was $10.39bn in the quarter, while the parent company’s ‘other bets’ division—which includes ‘moonshot’ investments such as the autonomous vehicle company Waymo—recorded a $989m loss.

Despite the fact that the business didn’t have to write off a hefty European Commission fine this quarter, the business’ costs and expenses, which totalled $29.76bn, were only slightly down on Q2 2018’s $29.61bn costs.

Chief financial officer Ruth Porat said the biggest contributor to the rising cost of revenues was costs associated with data centres and other operations, followed by content-acquisition costs, primarily for YouTube and its subscription businesses YouTube Premium and YouTube TV.

Sales and marketing costs were $4.2bn in the quarter.

Asia-Pacific continues to account for the search giant’s highest growth rate. APAC revenue grew 29% to $6.55bn year-on-year, a rebound from the low 27% growth rate in Q1, but still representing a slow-down from the 36% growth rate in Q2 2018.

US revenue was up 20% to $17.86bn, Other Americas grew 15% to $2.13bn, and EMEA revenue was also up 15% to $12.4bn.

While Alphabet does not break out individual revenue for its different businesses, Porat said that YouTube was the second largest contributor of revenue growth, followed by Google Cloud.

Google chief executive Sundar Pichai said that Google Cloud has an annual run rate of more than $8bn.

The company also reported a headcount of 107,646 employees, up 20% from a year ago. The headcount figure excludes a workforce of temps and contractors roughly equal in size.

Fresh antitrust investigations

Elsewhere, Pichai was quizzed by analysts on how a more intense regulatory environment would affect Google operations. The US Department of Justice announced a broad antitrust review of major online platforms on Tuesday (23 July), and has reportedly launched a specific antitrust investigation of Google. Just hours ago, the Australian Competition and Consumer Commission (ACCC) delivered a list of 23 recommendations for the government to consider, many of which take aim at Google and Facebook’s practices.

"We understand that there will be scrutiny," said Pichai. "It’s not new to us. We have participated in these processes before … To the extent we have to answer questions we will do so constructively, and to the extent there are concerns we will address them."

"For me, it's important that we stay focused on building helpful products to users and that's the value we ultimately provide our users," he added.

A version of this article was first published by Campaign Asia-Pacific


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