Image Source: Neon Tommy
Rebecca Wayman

Google's owner celebrates major profits increase during Q1 2018

Alphabet, Google’s owner based in California, has reported that its profits jumped by nearly 73 per cent in the first three months of 2018.

Despite rising costs potentially undermining the search engine’s performance, the figures revealed a strong Q1. Alphabet’s net income rose to £6.7bn from around 3.8bn in 2017.

Alphabet’s revenue also jumped from 26 per cent totalling around £22.2bn. Furthermore, the search engine had a successful billion-dollar boost from changing its accounting rules, but believes a lot of its revenue came from increasingly expensive online ads across Google, YouTube and its associated websites and apps.

Speaking to the BBC, Ivan Feinseth, an analyst at Tigress Financial Partners, said: “The strong economy has companies spending more on advertising and we have an ongoing migration from traditional types of media advertising to greater online and social media-based advertising.”

Alphabet’s profit margins fell in recent quarters as it reinvests in areas of its business such as cloud computing and hardware. The company also admitted its capital spending had tripled during Q1.

Investors are said to be worried about the European Union’s new General Data Protection Regulation (GDPR), due to come into force on May 25, giving the public more control over their data and ramp up fines for data breaches.

Some analysts believe it could prompt some users to reject receiving personalised ads online, reducing Google’s sales.

However, Google boss, Sundar Pichai, concluded: “GDPR is a fairly new public topic, but for us it is not new - we started working on it 18 months ago.

“We are working very closely with our publishers and our partners… It is a big effort, we are very committed to it and to getting it right.”

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