In 2021, Alphabet generated a net profit of $76 billion (€67.5 billion). With its growing market power, however, the company is increasingly becoming the focus of regulatory authorities worldwide.
In the fourth quarter alone, the US group made a profit of $20.64 billion on sales of $75.33 billion. The company thus clearly exceeded the expectations of analysts.
Quarterly revenue reflects “solid advertising plays across all formats and strong consumer presence online” as well as “substantial” growth in cloud services, CFO Ruth Porat said. While Alphabet lost a few advertising customers at the beginning of the pandemic, the company later benefited, like many other technology companies, from the switch to working from home and online trading.
In total, Google earned over 61 billion dollars from advertising in 2021, mostly played out via internet searches or the YouTube video platform. Cloud services grew 45 percent to $5.5 billion in revenue.
Alphabet is the world’s largest provider of online advertising
According to the analysis company eMarketer, the company will again defend its position in the growth market this year. According to this, Google is expected to earn over $171 billion from digital advertising in 2022, taking 30 percent of the global market, ahead of Facebook with 23.7 percent market share.
However, there is still a risk that the regulators in the USA and the EU will take stricter action: both in Washington and in Brussels, the competition watchdogs accuse Google of exploiting its dominant position on the Internet in a way that distorts competition.
Open to sensible regulation
Alphabet CEO Sundar Pichai said in a phone call with analysts that the company is open to “reasonable” regulation by the US Congress. But there is also concern that legislation could “destroy a wide range of popular services that we offer our customers,” Pichai said.
He warned of possible side effects of some of the proposed measures: In some cases, the security or privacy of users could be endangered or US companies could be disadvantaged, Pichai warned.
“Google has the hardest road ahead of any major tech company when it comes to antitrust action,” said Third Bridge analyst Scott Kessler. “Although Apple is bigger and the reputation of Meta or Facebook is worse, Google is the most in the focus of the US antitrust authorities.”
However, governments and courts are making slow progress in regulating Google: Just two weeks ago, the company appealed to the European Court of Justice against an antitrust fine of 2.4 billion euros imposed in 2017. The legal dispute concerns alleged anti-competitive practices in the market for price comparison services.
Billions in fines in Europe
Google is also arguing with the EU Commission about further billions in fines in court. A lawsuit is directed against a record fine of more than 4.3 billion euros imposed in 2018 for illegal practices on Android mobile devices to strengthen its own search engine. Another lawsuit is about a fine of almost 1.5 billion euros for abusing a dominant position in the online advertising market.
Source: Nachrichten
