Google moms and dad Alphabet whiffs on sales in the middle of debates

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Google’s facing its most troubled duration in history. Now its company — which was constantly an intense area in the middle of the outrageous headings — is dealing with problems, too.

The search giant’s storied marketing operation, which over the last 20 years has actually turned Google into among the most effective business in the world, is revealing indications of wear and slowing development. 

In the very first 3 months of the year, Google’s moms and dad, Alphabet, tallied $36.3 billion in sales, missing out on expert quotes of $37.3 billion, the business stated Monday. Earnings per share were $9.50. Analysts usually had actually anticipated $10.61 per share, according to a quote by Thomson Reuters.

Alphabet likewise took a $1.7 billion struck in the very first quarter, when the European Commission in March fined the search giant for “abusive” marketing practices. The business stated the charge impacted its revenues. Without the fine, Google’s earnings would’ve been $11.50 a share.

The business’s stock fell 7 percent in after-hours trading.

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The rare miss is an important shift because Google’s money-minting ad business has been the cornerstone of the company, allowing it to venture into experimental territory like driverless cars, medical tech and delivery drones. Alphabet on Monday also said those “other bets,” Google parlance for those longer-term moon shots, lost more money in the past quarter than they did over the same period last year. Operating losses were $868 million in the the first quarter, versus $571 million the year before.

Google also said sales of its flagship Pixel smartphones, the company’s answer to Apple’s iPhones and Samsung’s Galaxy phones, were down this year compared with the year before. Alphabet CFO Ruth Porat said on a conference call that the lagging sales were partly due to “recent pressures” industrywide in premium smartphones. 

Porat also teased a hardware announcement for May 7, the first day of Google’s I/O developer conference in Mountain View, California. Rumors have already swirled about new devices being unveiled at the confab, including a mid-tier phone called the Pixel 3a and a Nest Hub Max smart display.  

YouTube controversies

The disappointing financial results also compound a rocky stretch for Google, as its biggest issues have spilled into public view. Google’s employees have protested the company’s military contracts, its work in China and the company’s handling of sexual assault allegations directed at executives. CEO Sundar Pichai has also been dragged in front of Congress to defend Google over accusation of political bias.

More recently — in this quarter alone — Google has faced intense scrutiny over YouTube’s inability to police the content on its platform. The video service has been accused of prioritizing growth over the safety of its users. The criticism crescendoed after a shooter livestreamed himself while gunning down worshippers in a mosque last month. YouTube wasn’t able to contain the video’s spread on its platform, and it was uploaded tens of thousands of times.

During the conference call, Pichai didn’t directly address the tragedy, but nodded to YouTube’s recent controversies. “YouTube’s top priority is responsibility,” he said. “There are a lot more improvements which we will be rolling out in the next few weeks, and our work is ongoing.”

Google has also faced blowback over its artificial intelligence ethics board, made up of outside experts in the field. The company faced scrutiny for picking Kay Cole James, president of the conservative think tank the Heritage Foundation, who was accused of having anti-trans and anti-immigrant biases. Google eventually disbanded the board after only a week.

Privacy dustups

The company has also been criticized for its Sensorvault database, which police departments across the country have tapped for location data when trying to crack criminal investigations. Congress last week sent a letter to Pichai demanding answers about the database. 

Asked by one analyst about how controversies over Google’s data collection policies could impact future products, Pichai mostly sidestepped the question. 

“User expectations around privacy are constantly evolving. And we stretch ourselves to meet them, Pichai said. “And as part of that through this year, we are continuing to do a lot of work just for the overall goal of making sure privacy works for everyone.” 

First published 1:06 p.m. PT.
Update, 3:20 p.m. PT: Adds more information from Alphabet’s conference call with analysts. 

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