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Google Advertisement Surge, Online Shopping Drive Record Profit for Alphabet

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By Reuters | Updated: 27 October 2021

Google owner Alphabet on Tuesday reported higher than expected third-quarter advertisement sales, a sign that the business is overcoming new limits on tracking mobile users and that online shopping is as popular as ever heading into the holiday season.

Through its search engine, YouTube video service and partnerships across the Web, Google sells more Internet advertisements than any other company. Demand for its services surged in the past year as the pandemic forced people to spend more time online, and their new habits have persisted.

Google advertising revenue rose 41 percent to $53.1 billion (roughly Rs. 3,98,010 crore) during the third quarter. Alphabet’s overall sales jumped to $65.1 billion (roughly Rs. 4,87,730 crore), above the average estimate of $63.3 billion (roughly Rs. 4,74,250 crore) among analysts tracked by Refinitiv.

“The consumer shift to digital is real and will continue even as we start seeing people return to stores,” said Philipp Schindler, Google’s chief business officer. “The underlying takeaway is that people want more choice, they want more information, more flexibility, and we don’t see this reversing.”

Shares fell 0.93 percent to $2,760.19 (roughly Rs. 2 lakh) following the after-hours release of the financial results.

Quarterly profit was $18.936 billion (roughly Rs. 1,41,860 crore) or $27.99 (roughly Rs. 2,100) per share, beating expectations of $24.08 (roughly Rs. 1,800) per share and marking a third-straight quarter of record profit. Alphabet’s profit is subject to wide fluctuations because accounting rules require the company to measure unrealised gains from its investments in startups as income.

Investors had braced for some sales challenges for Google.

Anxiety by consumers over how Google and other companies use their browsing behaviour to profile them and then pick which ads to show has become widespread. In the latest challenge, Apple, whose iPhone devices account for half of the smartphones in the United States, gave its users more control to stop tracking over the past few months. The change led advertisers to recalibrate their spending in ways that Google rivals Snap, and Facebook said hurt their third-quarter sales.

Regulatory scrutiny

Alphabet’s chief financial officer, Ruth Porat, reported “modest impact” on YouTube advertisement sales from Apple’s efforts. But analysts said Google overall was less affected than peers because its search engine collects data on user interests that is valuable to advertisers and is unmatched in the industry.

“They are almost completely immune to Apple’s changes,” said Collin Colburn, an analyst at tech consultancy Forrester.

Other companies also faced slowdowns because advertisers cut spending as they struggled to staff up and keep shelves stocked amid hiring and supply-chain issues brought on by the pandemic. Schindler said supply-chain challenges affected only Google’s sales of automotive ads.

Google Cloud, which trails Amazon and Microsoft in cloud services market share, increased revenue by 45 percent to $4.99 billion (roughly Rs. 37,400 crore), slightly below estimates of $5.2 billion (roughly Rs. 38,980 crore).

Alphabet’s total costs increased 26 percent to $44.1 billion (roughly Rs. 3,30,575 crore) in the third quarter and the company’s workforce size passed 150,000 employees.

Alphabet shares have outperformed those of many big peers since the end of last year, rising about 57 percent. Microsoft is up 39 percent, Facebook 20 percent and Amazon 2 percent over the same period.

But shares of Alphabet trade at a slight discount to Facebook, the Internet’s No. 2 seller of online advertisements. Facebook trades at 6.8 times expected revenue over the next 12 months compared with 6.4 times for Alphabet.

Facebook has been swamped with accusations in recent weeks from a former employee who leaked thousands of confidential company files to media and filed complaints with the US securities regulator over alleged misrepresentations by the company about its risks from hosting inappropriate content.

Google has been caught up in some of the fallout. A YouTube policy official testified to US Congress earlier on Tuesday alongside other companies about the harms of social media to young users.

Investors also await further changes to Google’s businesses as a result of regulatory scrutiny. US and other authorities have alleged some of the company’s practices in advertising and search are anticompetitive, though the company argues they are to benefit users. In one concession to critics last week, Google said it would cut some of the fees it collects from apps on its Play app store starting next year.

But the move could end up generating new revenue for Google if it leads companies such as music streamer Spotify to start selling subscriptions through their apps and giving Google 10 percent to 15 percent of the sum.

Alphabet’s Porat said on Tuesday that earlier trims to Play fees would cut in to sales.

© Thomson Reuters 2021

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WhatsApp Said to Win Approval to Double Payments Offering to 40 Million Users in India

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By Reuters | Updated: 27 November 2021.

WhatsApp has won regulatory approval to double the number of users on its payments service in India to 40 million, a source with direct knowledge told Reuters on Friday. The company had requested that there should be no cap on users of its payment service in India.

Instead, the National Payments Corporation of India (NPCI) this week told the company it could double the user base to which it can offer its payment service – currently restricted to 20 million – the source said.

WhatsApp is owned by Facebook, which recently changed its name to Meta.

The source said the new cap would still hinder the company’s growth prospects given that WhatsApp’s messenger service has more than 500 million users in India, the company’s biggest market.

It was not clear when the new cap would come into effect.

WhatsApp did not immediately respond to a request for comment, while the NPCI declined to comment.

WhatsApp competes with Alphabet’s Google Pay, SoftBank- and Ant Group-backed Paytm, and Walmart’s PhonePe in India’s crowded digital market.

The NPCI gave WhatsApp approval to start its payments service last year after the company spent years trying to comply with Indian regulations, including data storage norms that require all payments-related data to be stored locally.

WhatsApp has almost reached its user base of 20 million for payment services, said the source, who declined to be identified as the details are private.

Online transactions, lending and e-wallet services have been growing rapidly in India, led by a government push to make the country’s cash-loving merchants and consumers adopt digital payments.

© Thomson Reuters 2021

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China Demands Tencent Submit New Apps, Updates to Inspection Before Being Uploaded: Report

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By Reuters | Updated: 25 November 2021

China has required Tencent Holdings submit any new apps or updates for inspections before they can be uploaded after a number of its apps were found to have committed violations, Chinese financial media outlet Yicai reported on Wednesday.

Yicai, citing unnamed sources, said the Chinese social media and gaming giant had been required to do so by China’s Ministry of Industry and Information Technology (MIIT) after some of its apps were found to have infringed users’ rights and interests.

It also said that MIIT had recently issued a notice to say that between November 24 to December 31, all mobile apps and their updates will need to undergo a roughly seven-day-long review before they can be uploaded to app stores.

Tencent said its apps remained functional and available for download in response to Yicai’s and other local media reports.

“We are continuously working to enhance user protection features within our apps, and also have regular cooperation with relevant government agencies to ensure regulatory compliance. Our apps remain functional and available for download,” the company said.

Chinese regulators have in over the past year mounted a wide-ranging crackdown on its tech giants, seeking to dismantle some of the industry’s long-held practices after accusing them of monopolistic behaviour and infringing user rights.

This has included a step up in checks on mobile apps by regulators. On November 3, MIIT ordered 38 apps from companies, including those of Tencent, to rectify the excessive collection of personal information.

© Thomson Reuters 2021

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Reddit to Shut Down TikTok-Like Dubsmash App, Integrate Video Tools With Platform

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By Reuters | Updated: 24 November 2021

Reddit is pulling the plug on its TikTok-like platform, Dubsmash, the social network said on Tuesday, just a year after buying it for an undisclosed sum to bolster its video creation tools.

The standalone Dubsmash app will not be available for download after February 22, Reddit said, as it rolled out new camera and editing features as part of its video tools.

TikTok’s massive success with short-form videos has driven other social networks to incorporate the format on their platforms, with Snap rolling out Spotlight; Facebook, now Meta Platforms, launching Instagram Reels; and Alphabet’s YouTube launching Shorts.

“The Dubsmash team has been accelerating Reddit’s video, so parts of Reddit will feel familiar to Dubsmashers,” the company said in a blog post.

Since Dubsmash’s acquisition, Reddit said it had seen 70 percent growth in overall hours watched, while the number of daily active video viewers rose by over a third.

Viewership for short videos, which the company defines as two seconds or less, has also risen by 50 percent quarter-over-quarter.

© Thomson Reuters 2021

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Spotify Launches ‘Netflix Hub’ on Its App to Lure Fans With Podcasts, Soundtracks From Popular Shows

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By Reuters | Updated: 24 November 2021

Music streaming platform Spotify Technology said on Tuesday it has introduced a new hub where fans can listen to all the official soundtracks, playlists and podcasts related to Netflix’s shows.

The Netflix Hub, as the companies are calling the new feature, will contain playlists from hit shows such as Money Heist and Bridgerton, as well as the official soundtrack from shows such as Squid Game. It can be accessed by both free and premium listeners.

The hub would also contain Netflix-tied podcasts including Okay, Netflix Is A Daily Joke, and The Crown: The Official Podcast, the Swedish company said in a blog post.

Spotify, which saw a rise in premium subscribers in the third quarter, has benefited from the pandemic as people turned to its music platform to stay entertained. But with growing competition from Apple Music and Amazon Music, Spotify is looking at introducing new features to attract more subscribers.

Earlier in 2019, it had also collaborated with Disney to create the Disney Hub.

Spotify said subscribers across the United States, Canada, Australia, New Zealand, the United Kingdom, Ireland, and India will have access to the hub.

© Thomson Reuters 2021

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DuckDuckGo Introduces App Tracking Protection to Stop Apps From Tracking Android Users

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By ANI | Updated: 22 November 2021

Privacy-focused browser maker DuckDuckGo’s new tool aims to prevent apps from tracking Android users.

According to The Verge, DuckDuckGo’s tool hasn’t been rolled out as part of an update to all Android phones, nor is it available as a separate download.

It’s built into DuckDuckGo”s privacy-focused browser app, but works across your device. In a post on its blog, the company said that the tool will block “trackers it identifies in other apps from third-party companies.”

Once App Tracking Protection is enabled, it will run in the background as you use your phone. The tool recognises when an app is about to send data to a third-party tracker, and will then prevent the app from taking your information.

DuckDuckGo said that it’s “continually working to identify and protect against new trackers,” which means that your data should be kept away from any new trackers that crop up.

From the DuckDuckGo app, you should also be able to see a real-time view of trackers that the tool has blocked, along with where your data would’ve been going.

The company says that although its App Tracking Protection tool isn’t a virtual private network (VPN), your device will behave as if it is one.

“This is because App Tracking Protection uses a local ”VPN connection” which means that it works its magic right on your smartphone. However, App Tracking Protection is different from VPNs because it never routes app data through an external server,” DuckDuckGo explained in its post.

While conducting its own test, DuckDuckGo found that more than 96 percent of some of the most popular free Android apps have third-party trackers that most users are unaware of.

As per The Verge, the company also discovered that 87 percent of these apps send user data to Google, while 68 per cent send data to Facebook.

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Amazon India Executives Charged by Police in Alleged Marijuana Smuggling Case

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By Reuters | Updated: 22 November 2021

Indian police said on Saturday they had charged senior executives of Amazon’s local unit under narcotics laws in a case of alleged marijuana smuggling via the online retailer.

Police in the central Madhya Pradesh state arrested two men with 20kg of marijuana on November 14 and found they were using the Amazon India website to order and further smuggle the substance in the guise of stevia leaves, a natural sweetener, to other Indian states.

State police said in a statement that executive directors of Amazon India were being named as accused under the Narcotic Drugs and Psychotropic Substances Act due to differences in answers in documents provided by the company in response to police questions and facts unearthed by discussion.

Police did not disclose how many executives were charged.

The police, who had previously summoned and spoken to Amazon executives in the case, estimate that about 1,000kg of marijuana, worth roughly $148,000 (roughly Rs. 1.1 crore), was sold via Amazon.

Amazon said in a statement that it does not allow the listing and sale of legally prohibited products, adding that it takes strict action against sellers in case of any contravention.

“The issue was notified to us and we are currently investigating it,” Amazon said of the alleged marijuana smuggling.

Indian authorities have in recent years intensified their efforts to crack down on illicit drugs. Many high-profile Indian actors and TV personalities have been under scrutiny from narcotics officials since last year.

© Thomson Reuters 2021

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