Google parent Alphabet returns to sales growth as businesses resume advertising

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In recent months, Google has stopped charging merchants for some promotional space and issued grants to help other businesses buy ads. The efforts followed the company’s first sales decline compared with a year-earlier period in the second quarter, since going public in 2004.

But the dominance of Google services has become a liability for the company too. The U.S. government last week sued the company for allegedly abusing a search monopoly and stifling competition. Other regulators in the United States and elsewhere have similar ongoing investigations.

The various cases could lead to Google having to divest some of its ad business in the coming years, though financial analysts doubt it will happen.

Google’s ad business accounted for 80 per cent of Alphabet’s US$46.2 billion in revenue in the third quarter. Analysts had expected US$42.9 billion in revenue, or 5.9 per cent growth from a year ago.

Alphabet’s profit was US$11.2 billion, or US$16.40 per share, compared with the average estimate of US$7.698 billion, or US$11.18 per share, among analysts tracked by Refinitiv.

Google competitors Facebook Inc, Amazon.com Inc and Twitter Inc also released financial results on Thursday that were above expectations, showing how internet companies have fared well through the pandemic. Facebook shares on Thursday were up 30 per cent this year, Amazon 71 per cent and Twitter 51 per cent.

Alphabet’s total costs and expenses rose 12 per cent from a year ago to US$35 billion in the third quarter, compared with a 7 per cent jump a quarter ago.

Capital expenditures dropped 20 per cent to US$5.4 billion, compared with a 12 per cent drop last quarter.

© Thomson 2020