Google-owned Alphabet Strong Revenue Growth Regardless of Fines and GDPR Worries

Despite being hit with a $5bn EU fine and concerns in relation to the effect of the new EU General Data Protection Regulation (GDPR), Alphabet, a Google-owned company, registered a second quarter revenue of $32.7 billion, a 26% jump from the same period last year according to its earnings report issued recently.

Google CEO Sundar Pichai told investors that the advertising platform is “firing all cylinders,” with ad revenue climbing to $28.1 billion in Q2 2018, compared to $22.7 billion in Q2 2017.

Alphabet stock had fallen slightly recently after the European Union levied a $5 billion fine against Google. Despite this fine, and potential further scrutiny under GDPR, this is the second consecutive quarter where Google-owned media drove a disproportionate share of Alphabet’s revenue growth. Publishers registered in the Google network saw about $600 million more than during the same period last year, while Google properties increasing revenue by almost $5 billion.

Google’s TAC (Traffic Acquisition Costs), as a percentage of overall advertising revenue, rose to 23% from 22% in 2017. Pichai and CFO Ruth Porat warned investors that the percentage will continue to rise for the foreseeable future, because mobile search has higher acquisition costs.

Pichai refused to speculate on GDPR implications and the tactics that the company will use to address the concerns in relation to the new EU regulation. He said “It’s super important to get it right. It’s been a big change for a lot of our partners as well, so we’re working closely with partners and regulators, but it’s too early to tell.”

He also refused to comment on potential changes to the Android operating systems after the EU antitrust commission charged Google last week with infringing on other search services by pre-installing services like the Chrome browser and the Play Store on smartphones.

Ruth Porat, chief financial officer of Alphabet and Google, on a conference call for investors said: “Our investments are driving great experiences for users, strong results for advertisers, and new business opportunities for Google and Alphabet. We’re pleased with the ongoing momentum in our advertising businesses”.