Google under pressure in online advertising and leaded by EU fine

Alphabet, the parent company of Google, has suffered a slowdown in growth due to pressure that has been confirmed in online advertising during a first quarter also marked by a fine imposed by the European Union.

Google under pressure in online advertising and leaded by EU fine

Always very concerned about the growth of the turnover, indicator of the state of health of its core business - the pub--, the investors sanctioned the group in stock market: around 22H50 GMT, the title receded more than 7% in electronic exchanges following the closing of Wall Street.

At $ 36.3 billion (+ 17%), sales are below the average expectations of analysts who expected a billion more. This trend also marks a marked slowdown in growth: in 2018, it had increased by 26% over one year.

This slowdown is due in particular to the fact that smartphones are capturing more and more consumer activity. Internet platforms charge advertisers less for mobile advertising than for computers. As more consumers use their smartphones, this source of revenue is under pressure.

The pressure is even stronger during this quarter as the growth of the traffic itself (number of clicks on advertisements) also slowed, including on YouTube, said the financial director Ruth Porat, during a conference telephone with analysts.

Google and Facebook reign supreme in the global online advertising market.

Alphabet, which also produces devices such as smartphones and connected speakers, also noted "pressure on the high-end smartphone market," suggesting that sales of its pixels had been disappointing. But "the momentum continues" for the speakers connected to voice command, assured Ms. Porat.

She also promised an "announcement" rated devices at the annual Google Developer Conference in May.

- Expenditure -

The group has been experiencing for several quarters a sharp rise in spending (recruitment and technology, in particular) and once again warned Monday that its spending will increase.

"Our priority has always been to invest in the long term," said Google CEO Sundar Pichai.

Alphabet also invests a lot in the purchase of premises: it announced in 2018 several important real estate purchases in New York.

In February, Google announced plans to invest $ 13 billion in offices and data centers in the United States in 2019.

Another element very observed by the markets, the costs of acquisition of revenues ("Traffic Acquisition costs" or TAC) rose to 6.86 billion dollars (+ 9%). These TACs are sums paid to third parties by Google to ensure that it is the default search engine of devices or operating systems or that its various applications are pre-installed in smartphones.

The European Commission imposed on March 20 for the third time in less than two years a large fine to Google, accusing him again of anticompetitive practices in the European Union.

The financial penalty reached 1.49 billion euros, a lower figure compared to the previous two, respectively two and three higher.

Because of this new European fine, Alphabet's quarterly net profit fell 29% to $ 6.7 billion.

At the end of March, the group had 103,459 employees, compared with 85,050 at the end of March 2018.