Google’s parent company Alphabet on Tuesday announced quarterly profit that beat expectations and almost doubled in 2021, after a booming holiday season for the online ad giant facing antitrust scrutiny.
The tech giant had a net income of $20.6 billion in revenue that grew 32 percent to $75 billion in the last quarter of 2021, ending the year with a total of $76 billion in profit.
That was nearly double the reported $40 billion annual gain for 2020, as the pandemic had already accelerated a shift to online shopping, working and learning that also benefited other giants like Amazon and Facebook.
Alphabet CEO Sundar Pichai cited “strong growth in our advertising business…record quarterly sales for our Pixel phones despite supply constraints, and our cloud business continues to grow strongly” to the success.
In all, Google earned more than $61 billion in ad revenue, mostly from online search and its video platform, while its cloud business grew 45 percent to $5.5 billion in revenue.
Google’s online dominance has propelled it to new heights during the pandemic period, but it has also left it in the crosshairs of regulators around the world.
Pichai said during an earnings call that Alphabet is open to “sensible” regulation by Congress, but is “genuinely concerned that they could break a wide range of popular services that we offer our users.”
Some regulatory proposals could have unintended consequences, such as weakening privacy and security, or putting US companies at a disadvantage, according to Pichai.
Alphabet’s strong earnings come after Apple, another pandemic-era winner, reported record earnings last week as markets were nervous about the future of technology and geopolitical risks such as the Ukraine crisis.
Yet scrutiny from regulators around the world is piling up as one of the biggest risks for the Silicon Valley giant.
“Google has the biggest uphill battle in terms of antitrust issues among all the big tech companies,” wrote Scott Kessler, an analyst at Third Bridge.
“Despite Apple’s larger size and Meta/Facebook’s bad publicity, Google is seen as more at risk in terms of US antitrust law,” he added.
Retail Ads Help Drive Growth
Just last week, a group of top US justice officials accused Google of tracking and profiting from users’ location data, even though consumers thought they could protect their privacy on the services of the tech giant.
These lawsuits are the latest legal threats against Google and other US big tech giants, which have long faced investigations and court cases but lack new national laws to regulate their businesses.
Courts and legislatures are not moving fast. Two weeks ago, for example, Google appealed a European court ruling that upheld a €2.4 billion fine imposed by Brussels in 2017 for anti-competitive practices in the price comparison market.
Alphabet’s results, which beat expectations, offered positive signs even as slowing growth overshadowed companies like lockdown lifestyle champion Netflix.
Netflix lost tens of billions of dollars in market capitalization last month but has rebounded, after projecting growth of just 2.5 million subscribers this quarter.
Fortunes were quite different for Google, as Alphabet said its board had approved a 20-to-1 stock split that would make the shares more affordable for small investors.
The firm predicts its growth will continue into 2022, with digital advertising expected to generate more than $171 billion for Google this year, or 30 percent of the global pie, just ahead of Facebook.
“In the fourth quarter, retail was again by far the largest contributor to year-over-year growth in our ad business,” Alphabet CBO Philipp Schindler told analysts.
“Finance, entertainment and travel were also major contributors,” he added.
The stock was up nearly nine percent in secondary market trading on Tuesday at 22:40 GMT to $2,990.
