Google parent firm Alphabet nets big first-quarter profit | News | DW | 24.04.2018
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Google parent firm Alphabet nets big first-quarter profit

Alphabet, the parent company for Google, reported better-than-expected profits in the first quarter. The first-quarter surge came on the back of strong ad sales and an accounting adjustment for investments in startups.

On Monday, Alphabet reported a 73 percent surge in net income, to $9.4 billion (€7.7 billion), or $13.33 per share, in the first three months of 2018.

Worldwide sales for the California-based tech giant, which owns the internet search engine Google, increased to $31.1 billion, up 26 percent from the first quarter last year. Adjusted earnings, excluding the investment-related gains and other items, were $9.93 per share, and its effective tax rates dropped from 20 percent to 11 percent a year ago.

The first quarter jump can be attributed to revenue from advertisements sold by Google, which rose as advertisers pursued slots on its search engine, YouTube video platform and millions of other partner apps and websites.

Read more: Google and Disney cut ties with YouTube star PewDiePie over anti-Semitic content

Additionally, about $3.40 of Alphabet's earnings per share were attributed to a new accounting method for unrealized gains in Alphabet's investments. The rise in value of its stake in ride-sharing app Uber is believed to be one of the main sources of growth in this area.

"Our ongoing strong revenue growth reflects our momentum globally," said Ruth Porat, Alphabet's chief financial officer, as part of the report. "We have a clear set of exciting opportunities ahead, and our strong growth enables us to invest in them with confidence."

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Looming privacy regulations

Alphabet's first-quarter growth comes against the backdrop of impending privacy regulations in Europe and possibly the United States.

On May 25, the European Union's General Data Protection Regulation will come into full effect and require Google, Facebook, Slack and other US tech companies to adopt policies to ensure that their users are aware of what data they provide to online services. The new rules may force Google to change its business practices and consequently affect future ad revenues.

Read more: Who needs privacy anyway?

There could also be similar legislation in the United States, especially after social media giant Facebook, Google's main rival in online ad revenue, was questioned by Congress on how Cambridge Analytica, a British data analysis firm, was able to acquire data on unwitting Facebook users at a hearing this month. Google was initially going to be required to answer questions alongside Facebook, but was later excused.

But these looming regulations did not deter Alphabet investors in the first quarter. Shares have risen 2 percent since the beginning of the year, rebounding last week after initially falling by nearly 3.5 percent.

dv/rc (AFP, AP, Reuters)

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