NEW YORK: Alphabet Inc reported that expenses from its Google search business grew more slowly in the second quarter while revenue rose more steeply than analysts had anticipated, boosting profit above Wall Street targets and pushing shares up 3.6 per cent after hours. Google’s dominance in online advertising has been challenged this year by the antitrust battle over its Android mobile software, which led to a $5 billion fine for the quarter, and other regulatory actions, including new European privacy rules.
Government pressure to improve moderation of user-created content has forced Google to hire more analysts. YouTube, a Google-owned streaming service, has increased spending on video content to keep consumers from shifting to offerings from Netflix Inc and expanding media conglomerates such as AT&T Inc. But those issues have yet to halt Alphabet, which has grown quarterly revenue at least 20 per cent year-over-year for two straight years.
The quarterly growth rate of what the company pays ad partners, called traffic acquisition costs, fell for the first time in three years, which Atlantic Equities analyst James Cordwell described as the “most impressive” piece of the results. Google Chief Executive Sundar Pichai told analysts that investments in artificial intelligence software meant to better predict where to place ads are making its services more attractive to advertisers. — Reuters
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