Google hits a rough patch

Google’s South Lake Union campus, Seattle, WA. © iStock.

Quarterly results for Alphabet, Google’s mothership, are in, and the news is bad: Q3 2022 earnings show a 27% decrease in profits year over year, which translates to a 5 billion USD drop. The main reason being that most of Alphabet’s profits are derived from advertising sales, mainly on Google Search, while the unstable economy is causing many Google clients to press pause on advertising expenditures. What’s more, the Google Cloud project, which lags behind competitors Amazon and Microsoft, is still bleeding cash, with a loss of 699 million USD this quarter compared to 644 million USD in Q3 2021.

In response, Alphabet CEO Sundar Pichai slowed hiring in August and instated cuts in R&D. The Google Hardware laptop division was canned, the experimental Area 120 saw half its projects axed, the Loon remote-area Internet access project was spun out into a separate company, and the plug was abruptly pulled on Google’s Stadia game service. YouTube, Google’s other flagship, is struggling to monetize its Premium feature and is still living off advertising, not to mention TikTok’s looming presence. Over the past year, Alphabet stock has dropped 39.4%, from 151.5 to 91.8 USD.

⇨ Ars Technica, Ron Amadeo, “Google profits plummet 27 percent in Q3 2022 earnings report.”

2022-10-26