Alphabet CEO Sundar Pichai has warned that the Department of Justice’s proposed remedies for Google’s monopolistic behaviour could impact US leadership of the global tech market – after announcing enormous growth in the megalithic firm’s ad business.
The conglomerate on Tuesday announced [PDF] Q3 2024 revenue of $88.25 billion – a nice jump from the $76.7 billion from the same quarter last year. Net income was $26.3 billion, up from $19.7 billion last year.
Execs told investors Google continues to “re-engineer the cost base,” but the many rounds of job cuts we’ve reported have seen headcount fall by just 1,112 – to 181,269 – in the last year.
A more significant cut was made to the cost of serving AI Overviews – the prose summaries of search results that Google produces using generative AI. That figure dropped by 90 percent.
That matters, because generative AI changes the search experience. If Google can’t match its rivals, its revenue could take a hit. Pichai revealed Overviews were enabled in more than a hundred new countries this week, will therefore be available to over a billion users, and have been integrated well with its ads platform.
The CEO also talked up the AI prowess of the Google Cloud, which posted $11.3 billion of revenue – a $2.9 billion year-over-year jump. Pichai said the business has “real momentum” and its AI offerings “are helping us attract new customers, win larger deals, and drive 30 percent deeper product adoption with existing customers.”
The G-cloud can do so, he observed, because Google has all the AI hardware needed – a blend of Nvidia GPUs and its own sixth-gen Trillium tensor processing units – to satisfy most workloads.
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One workload from which Google itself is benefiting is code generation: Pichai said a quarter of the Chocolate Factory’s new code is now written by machines and then reviewed by humans. “This Helps our engineers do more and move faster,” the CEO enthused.
Capital expenditure remained colossal: $13 billion went out the door in Q3, dominated by servers and networking equipment. Pichai told investors to expect the same level of spend in the next quarter.p>
Pichai took the time to note a couple of milestones. The first was YouTube’s combined ads and subscription revenue topping $50 billion over a four-quarter period – meaning the vid-streaming site accounts for almost a sixth of Alphabet revenue.
The other was Alphabet’s Waymo self-driving car unit, which investors were told “is now a clear technical leader within the autonomous vehicle industry and creating a growing commercial opportunity.” Waymobiles are driving more than one million fully autonomous miles and serving over 150,000 paid rides each week.
Investment analysts on Alphabet’s earnings call wanted to know if the antitrust case Google recently lost could jeopardize deals that see its search services enjoy prominent position on many devices. Pichai steered around such questions on grounds that the case is in progress, but warned possible remedies “could have unintended consequences, particularly to the dynamic tech sector and the American leadership there.”
Of course the reason for the antitrust action being brought was results like those announced on Tuesday – demonstrating that Google has colossal market share and is only getting bigger and more powerful. Alphabet execs evidently didn’t join the dots.
Investors like what they heard: Alphabet’s share spent the day shuffling upwards from $169.38 to $171.86, before popping to over $181 in after-hours trading. ®
