Google and YouTube are ‘hungover’ after the pandemic

published on Wednesday, April 27, 2022 at 12:39 p.m.

Alphabet, the parent company of Google, made a profit of $16.4 billion in the first quarter, 8% less than a year ago, a sign of a return to normal after the pandemic boom.

At 68 billion dollars, its turnover jumped 23% over one year, but it is also slightly below analysts’ expectations.

The Californian group suffers from the comparison with the year 2021, when advertisers invested heavily in online advertising to be seen by consumers riveted to their screens, unable to get out as much as before.

Despite the resumption of in-person activities, “time spent on YouTube has continued to increase”, assured Sundar Pichai, the head of Alphabet, during the conference call with analysts.

But the platform disappointed with weak growth over one year. Ads on the video platform generated “only” $6.9 billion in the first quarter, not much more than last year’s $6 billion.

Between inflation and difficulties in the global supply chain, advertisers must “manage budgets carefully”, notes Paul Verna, analyst at eMarketer, for AFP.

And the ultra-popular TikTok platform “is now a major threat” in the essential market for mobile video consumption, he adds.

Both factors “do not bode well for online advertising in general and for YouTube in particular,” he added.

– “Hangover” –

YouTube took a stand in TikTok territory in March 2021 by launching YouTube Shorts, a very short format (less than 60 seconds). These videos now generate “more than 30 billion daily views, four times more than a year ago”, welcomed Sundar Pichai.

He said his engineers would, “as usual, focus first on creating a great user experience before working on monetization.”

However, a possible “post-pandemic hangover” should not be excluded, underlines Paul Verna.

The big tech companies “admittedly didn’t celebrate, but the health crisis has boosted their business enormously”, he explained. “That kind of growth couldn’t last. If you take that aspect into consideration, the results aren’t disastrous at all, Google remains a leader in search and very strong in video.”

Ruth Porat clarified that the comparison would be even “harder” for the current quarter, a period also affected by the closure of its commercial activities in Russia, linked to the war in Ukraine.

The action of the Californian group lost about 5% during electronic trading after the closing of the New York Stock Exchange.

Alphabet has also recruited with a vengeance – the company now has nearly 164,000 employees worldwide, against 140,000 a year ago and invested in research and development.

In early March, the company announced plans to buy cybersecurity firm Mandiant for around $5.4 billion, to bolster its cloud offering.

Google Cloud saw its revenue jump 44% to $5.8 billion in the first quarter.

– Fewer cookies –

Google also announced on Tuesday the addition of information to the applications available on its download platform, Play Store, so that users are better aware of the data that is collected on them.

The Android operating system, which is owned by Google, interfaces with the overwhelming majority of mobile phones around the world.

“Users want to know what the data collected is used for and whether the app publisher shares it with third parties,” Suzanne Frey, a group vice president in charge of Android privacy, said in a statement.

Sentenced in January to a heavy fine by the French personal data regulator, Google has allowed its European users since last week to refuse the deposit of “cookies” with one click.

These computer files track their online browsing, so that third parties can then target them with personalized ads.

Google had pledged in January to change its practices, after being sentenced by the Cnil, the French personal data policeman, to pay a fine of 150 million euros and to make changes within 3 months.

Facebook had also been fined 60 million euros and now displays a button to allow “only essential cookies”.