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Alphabet profit hit by EU fine on Google
[SAN FRANCISCO] Google parent Alphabet on Monday reported a quarterly profit of US$3.5 billion, with a massive fine by the European Commission biting into earnings.
The technology giant reported that revenue grew to US$26 billion in the recently ended quarter, and that profit would have tallied nearly US$6.3 billion if it weren't for a US$2.74 billion antitrust fine levied on search engine Google by the European Commission.
Revenue was up 21 per cent from the same quarter last year, according to earnings figures.
"We're delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams," said Alphabet chief financial officer Ruth Porat.
Alphabet shares slid about 2.9 per cent to US$969.03 in after-market trades that followed release of the earnings figures.
Investors have been concerned about what the regulatory trouble in Europe means for Alphabet, which gets most of its money from Google advertising while investing in "other bets" such as self-driving cars.
Alphabet took in US$248 million in revenue and posted a narrowed loss of US$772 million in its "other bets" category in the recently ended quarter.
Meanwhile, Google and the EU are gearing up for a battle that could last years, with the Silicon Valley behemoth facing a relentless challenge to its ambition to expand beyond search results.
Brussels has already spent seven years targeting Google, fuelled by a deep apprehension of the company's dominance of Internet search across Europe, where it commands about 90 per cent of the market.
In a verdict that could redraw the online map worldwide, the EU's top antitrust sheriff Margrethe Vestager in June imposed a record fine on Google for illegally favoring its shopping service in search results.
The EU accuses Google of giving its multitude of services too much priority in search results to the detriment of other price comparison services.
The decision - if it survives an expected appeal process - could prove to be momentous for Google, as well as for competition law in general.
The EU is also examining Google's AdSense advertising service and its Android mobile phone software.