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Alphabet earnings marred by EU fine

July 25, 2017

Alphabet, the owner of Google and YouTube, has reported a staggering jump in revenues, but its net income suffered from a hefty fine. Experts said it maintained a growth rate rarely seen among companies its size.

https://p.dw.com/p/2h5SE
Google Alphabet
Image: picture-alliance/dpa/J. Büttner

Alphabet logged a 21-percent surge in revenue for its latest quarter, taking it to combined sales of $26 billion (22.3 billion euros).

Net profit came in at $3.5 billion for the three months under review. Bottom-line earnings would have been even larger, had it not been for a record $2.7-billion European Union antitrust fine.

Risks of violating EU competition rules had long shadowed Alphabet's Google unit, and antitrust enforcers in Brussels last month slapped the record fine on it for favoring its own shopping service.

The fine came in the first of three EU probes of Google's dominance in searches and smartphone operating systems, with analysts monitoring the impact of the fine closely.

Google fined a record €2.5bn

Cautious outlook

"It's not so much the money or the fine itself," said Josh Olson, an economist with Edward Jones. "But the questions linger about what impact that could have on Google's Europe business, and they did not really comment on that."

US antitrust enforcers thus far have chosen not to follow Europe's lead in curbing Google's market dominance.

Despite the positive overall results, Alphabet noted that costs were rising faster than sales and warned that expenses would remain high as more searches shifted to mobile devices.

The squeeze on expected future profit appeared to weigh on the firm's share price, which dropped by about 3 percent after the bell Monday.

hg/uhe (Reuters, AFP)