Alphabet, head office of Google, reported on Monday a net profit of 3.500 million dollars in the second quarter with a heavy fine from the European Union (EU) eroding its benefits.
The American technological giant announced a turnover of 26,000 million, which means 21% more than in the same quarter of 2016. Alphabet estimated that its profit would have reached almost 6,300 million dollars without the fine of 2,740 million dollars the EU applied for abuse of dominant position of its search engine Google.
“We are delivering strong growth with underlying momentum as we continue to make investments focused on new revenue streams,” said Alphanet chief financial officer Ruth Porat. The group’s shares fell by almost 2.9% to $ 969.03 in electronic securities transactions following the release of the results.
Investors have been concerned about what the problems in Europe mean for Alphabet, whose revenue comes largely from ads on Google while investing in “other bets” technology, such as driverless cars. Alphabet obtained revenues of 248 million dollars in the “other bets” category and losses of 772 million in that category.
Meanwhile, Google and the EU are preparing for a battle that could last for years while the US group continues to ambition to grow beyond its search engine. Brussels spent seven years investigating Google moved by its deep apprehension of the dominance that Google has in internet searches in Europe. 90% of that market is from Google.
In a ruling that can set a global precedent, the EU imposed a record fine on Google in June for illegally favoring its purchase services in Internet searches. The EU accuses Google of giving its multiple services too much prominence in the search for results to the detriment of other services that also offer users a price comparison.
If you go through an appeal process, it can be key both for Google and competition law in general. The EU is also examining the Google AdSense ad service and its mobile phone system