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Alphabet's revenue recovers despite looming antitrust lawsuit

Cherlynn Low
·Reviews Editor
·2-min read

Just like that, another quarter has come and gone. Since its last earnings report was released in July, Google’s parent company Alphabet has grown its revenue to $46.2 billion in the third quarter this year. That’s not only better than last quarter’s $38.3 billion but also beats last year’s $40.5 billion for the same period. Alphabet’s net income of $11.2 billion this quarter is a significant improvement over the $7 billion from last year, too.

The general increase in revenue can mostly be attributed to “an increase in advertiser spend in Search and YouTube as well as continued strength in Google Cloud and Play,” according to chief financial officer Ruth Porat in the company’s press release.

On the company’s earnings call, CEO Sundar Pichai said “This year, including this quarter, showed how valuable Google’s founding product Search has been to people.” He acknowledged the Department of Justice’s lawsuit asserting Google of “unlawfully maintaining monopolies” around search and search-related advertising. Pichai said, “Regarding the DOJ’s lawsuit, we believe that our products are creating significant consumer benefits and will confidently make our case.”

Pichai also highlighted some recent announcements Google made around Search, including some AI upgrades, an improved spelling algorithm and a hum-to-search feature to help people identify songs stuck in their head.

In a statement, Pichai said “We had a strong quarter, consistent with the broader online environment.” Since these results represent the company’s earnings for the quarter that ended on September 30th, it doesn’t include sales of Google’s latest flagship phones or smart home devices. Pichai shouted out these “great new products available for the holidays,” saying the new Pixel phones and Chromecast were positively reviewed. He added, “We have a terrific product roadmap ahead.”

Search and hardware meet when Google thinks about serving its users the information they are looking for where they are, Pichai said. “For us it’s important holistically that we’re meeting users’ information needs and out of which the monetization opportunity also works as well... be it Discover or how we pick up on YouTube.”

YouTube is also an area of focus for the company. Pichai noted that “As a sign of the times, views for guided meditation videos are up 40 percent, while DIY face mask tutorials have been viewed over one billion times.” He said that subscriptions continue to grow, with more than thirty million subscribers to music and premium services and about five million on a free trial.

Despite seeing better revenues than last year, Alphabet’s growth appears to have slowed. This quarter’s increase in year-over-year revenues is 14 percent, compared to the same period last year’s 20 percent. Still, overall the company is making more money than it did in 2019 so far, and that’s in spite of the pandemic.