With its YouTube video platform seeing a decline in advertising revenue for the first time since the firm started tracking the unit's performance, Google reported its fifth consecutive quarter of decreasing sales growth.
The findings demonstrate how the economy's deterioration has spread to some of its more enduring brands, including numerous software firms whose sales and stock prices rose in response to the pandemic. On October 25, 2022, Microsoft Corp. released its worst quarterly earnings in more than two years, while Texas Instruments Inc. revealed that demand for personal electronics and some other industrial buyers was waning.
The Google search results indicate that the recently battered digital advertising sector will remain fragile. Unexpected weakness was displayed by a few of Google's critical assets, like YouTube and search, which had long been the main drivers of the company's total growth. The third quarter saw the lowest revenue increase for parent firm Alphabet in more than two years. As reported by the company, there was a significant decline in the total revenue and net profit incurred by Google's parent company, Alphabet Inc., in the third quarter, September 2022, compared to the previous quarters in 2022 and 2021.
Alphabet's full-time employment base grew, the most significant change ever when the company's management talked about becoming stricter in their hiring. After-hours trading on Alphabet shares saw a more than 6% decline.
Despite recent efforts by Google to reduce its reliance on advertising, the internet giant still derives most of its income from adverts displayed next to search results and movies recommended by the company's algorithms.
Since the second quarter of 2020, when the coronavirus fanned advertising anxieties, Alphabet's revenue growth in the third quarter was at an all-time low. Recently, Google has urged major businesses to use automated technologies for buying advertising across its properties and those of other web publishers.
The advertising revenue on YouTube decreased, marking the first decline since Alphabet started disclosing the unit's financial performance in 2020. Compared to other areas of Google's business, YouTube is more dependent on so-called brand advertising, making it more vulnerable to spending cuts.
Google largely escaped the privacy restrictions made by Apple Inc. last year, which have caused problems for internet firms that rely on user monitoring across mobile apps for ad targeting.
However, the slowdown in the global economy has forced Mr. Pichai to look for methods to raise the company's bottom line after a rapid expansion sparked by a rise in fortunes during the pandemic. Google shut down its streaming gaming service Stadia last month, September 2022, and reduced funding for an internal business incubator.
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