Alphabet profits hit by Google antitrust fine

Google’s parent company Alphabet suffered falling profits in the second quarter following the record fine it received from the EU in June.

Alphabet posted strong revenue results however in its earnings report for the period between April and June of this year. The company took in $26bn during those three months, a rise of 21% year-on-year.

The European Commission fine of €2.42bn for anti-competitive behaviour last month had a significant effect on Alphabet’s bottom line, as its profits dropped to $3.5bn, a decline of 28% in comparison to its figures from last year.

The quarterly results largely came in ahead of estimates from analysts however, with its earnings per share reported to be $5.01, while it had been expected to fetch around $4.49 per share.

The fine slapped on Google was the largest seen in the history of the EU’s antitrust division, and came about after the search engine was deemed to have given priority to results for its own shopping service over competitors.

Alphabet has said it will mount an appeal against the mammoth fine.

The tech giant’s chief financial officer Ruth Porat said it was continuing to diversify its revenue streams in order to drive profits.

"We're delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams," Porat said.

SWITCH TO MOBILE

Excluding the EU fine, on the face of it Alphabet appears to have posted an impressive quarter between April and June as it continues to rake in the cash from advertising revenues.

Jordan Hiscott, chief trader at Ayondo Markets, asserted that when looked at more specifically those advertising revenues are being adversely affected by increased traffic via mobile as opposed to desktops.

Hiscott said: “Looking at its advertising unit, the company’s core business in my view, the amount prospective advertisers pay users for advertising to their website has declined by 23%, which is much higher than was previously forecast. This decline is partly down to a change in desktop verses mobile traffic, an issue Facebook has also experienced in recent years.

“The transition of users from desktops to mobile is a trend I can only see increasing dramatically and there’s no doubt it will be high on Google’s agenda. To confirm this area of contention, stock is trading down in the pre-market – approximately 3% at $973.”