Google's Alphabet hit by Europe's other GDPR: Global Domination = Profit Reduction

Google's Alphabet hit by Europe's other GDPR: Global Domination = Profit Reduction

Google's Alphabet hit by Europe's other GDPR: Global Domination = Profit Reduction

Shares of Google's parent company Alphabet jumped more than 5% in after-hours trading Monday, hitting a new record high, following the company's second-quarter earnings report that topped Wall Street's expectations.

While the European Union fine, announced last week as a penalty for abusing the market dominance of its Android operating system, did eat into profit, on an adjusted basis the company posted earnings of $11.75 a share, ahead of analyst estimates for $9.59. Operating income was just $2.8 billion, which is due in large part to the recent $5 billion fine from the European Union. They are also likely to keep an eye on the impact of the recently passed General Data Protection Regulation law in Europe, and its impact on digital ad sales.

The EU said Google had used the mobile operating system to illegally "cement its dominant position" in search.

Googlechief executive Sundar Pichai said that it was too soon to speculate on how Android may be affected by the ruling but said the company would take a "constructive approach".

"There do not appear to be any signs that should cause a meaningful slowdown any time soon, as fines from the European Commission are not likely to hamper Alphabet's growth rate", Brian Wieser, an analyst at Pivotal Research Group, wrote in a note to investors.

"One of the biggest opportunities for investment continues to be in our ads business", Porat told analysts on the earnings call.

Riding on Search engine and YouTube growth, Google's revenue jumped 26 per cent to $23.3 billion.

Analysts had expected net income of $6.7 billion on revenue of $25.6 billion.

Google's attempt to settle its antitrust case in Europe was too little and too late
Alphabet shares soar despite hit to profit from Google’s EU fine

Profit margins have dipped as more ads get shown on mobile devices, where Apple Inc and other firms charge fees to distribute Google search on their devices and apps.

"We delivered another quarter of very strong performance", said Alphabet Chief Financial Officer Ruth Porat.

Other tech giants Amazon and Facebook will report quarterly results later in the week. Google's capital spending climbed to $5.3 billion, up 87 percent from the same period in 2017.

"Alphabet also breaks out the revenues and losses for its 'Other Bets, ' like healthcare company Verily, internet service provider Fiber, and self-driving auto company Waymo".

But the issues have yet to halt Google, which has grown quarterly revenue at least 20 percent year-over-year for two straight years.

US26.24 billion (excluding traffic acquisition costs) compared to an expected $US25.55 billion.

Biogen (BIIB.O) rose 3.7 percent and Eli Lilly (LLY.N) rose 2.5 percent, both hitting their highest in three years after strong results.

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