Google parent company Alphabet sees profits fall again

The Google logo is pictured atop an office building in Irvine, California, U.S. August 7, 2017. REUTERS/Mike Blake

Profits are down at Google parent company Alphabet for the second quarter in a row, even as its revenue increases. Alphabet made about $18.5 billion in profit in the second quarter of 2021, which is down to $16 billion in the same period this year. In its latest earnings report, CEO Sundar Pichai has warned of strong “economic headwinds” that could affect the profits of the business in the short term.

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It seems like rising expenses have played a part yet again, as was the case last quarter. The company actually brought in more revenue than it did in Q2 2021. This quarter, its revenues were almost $69.7 billion, up from last year’s $61.9 billion. However, compared to this time in 2021, Google’s spending around $3 billion more on both research and development and sales and marketing.

Over the last couple of months, Google has warned employees that times could be getting tough. Early in July, Google CEO Sundar Pichai sent a memo warning that the company’s “not immune to economic headwinds” and saying that the company would “need to be more entrepreneurial, working with greater urgency, sharper focus, and more hunger than we’ve shown on sunnier days.” Just over a week later, the company reportedly told employees it was pausing hiring for two weeks, saying that it would use the time to “review our headcount.”

As is the case with many business this year, hiring is being slowed down and in many cases a lot of employees are being let go. To put Google’s employee numbers into perspective, they ended Q2 2021 with 144,056 employees. By Q2 2022, that number had ballooned to 174,014.

Google’s revenue base has seen some shifts, but it is largely still contributing the same proportions across the business. “Google Search & other” ads are still Google’s bread and butter, bringing in almost $40.7 billion. Google’s Cloud business made around $6.2 billion in revenue (though as usual Google lost money on it overall — around $858 million). YouTube advertising made the company around $7.3 billion. While that’s a substantial sum, it represents the slowest growth for the video platform that Google’s seen in over two years.