In the fourth quarter of 2022, Google’s profits plummeted from $20.6 billion to $13.6 billion. © Getty / Sean Gallup
Snap’s struggles in the ad market didn’t bode well for industry heavyweights like Google. Confirmation at the end of the fourth quarter, during which the Mountain View firm saw its advertising revenues decline by 3.6%, to 59 billion dollars over the last three months of the year 2022. For YouTube, the drop is even more pronounced with less than 8 billion dollars in turnover (-7.8%) in the last quarter of 2022, against 8.6 billion over the same period a year earlier.
Faced with these advertising disappointments, Google’s revenues rose very slightly between October and December, to 76 billion dollars. Profits collapsed from $20.6 billion to $13.6 billion. The finding is hardly more flamboyant in terms of operating profit, a barometer of the company’s profitability, which amounted to 18.2 billion dollars against 21.9 billion in the fourth quarter of 2021. To make matters worse, the cloud branch did not meet market expectations with a turnover of 7.3 billion dollars.
US government firings and crusade
Dominated by Amazon Web Services (AWS) in the cloud, jostled by TikTok and Netflix on YouTube, Google is at a crossroads and will quickly have to find new lines of revenue to take advantage of a breath of growth. To trim its margins, the subsidiary of Alphabet, like most other Gafam, disconnects its projects deemed too unprofitable, like Area 120, the internal incubator yet contributor to the flight of Gmail and Google News . And after asking its employees last year to increase their productivity, the company run by Sundar Pichai decided to lay off 12,000 employees, or 6% of its global workforce.
In addition to the slowdown in its growth, Google sees other threatening clouds, coming in particular from the American authorities. While complaints have been piling up against the parent company Alphabet for several years, the American government raised its tone again at the start of the year by attacking the group, alongside eight states, including California and New York, to put end to its anti-competitive dominance in the online advertising market. The threat hanging over Google is not insignificant, since the plaintiffs want to force the firm to dismantle, purely and simply, its advertising activity, which still accounts for nearly 80% of its income today.