Google has done it again — raking in more money than ever before for the second quarter in a row as the COVID-19 pandemic continues on. Alphabet’s Q3 2021 earnings show an all-time record revenue of $65.1 billion and record profits for the fifth quarter in a row at $18.9 billion.
As we mentioned last quarter, the growth we’re seeing in 2021 is unusually large: a huge leap over 2020.
Revenue increased 41 percent year over year; profits increased nearly 69 percent.
Proportionally, Google’s businesses seem to all be doing roughly the same was they were last quarter, just slightly better in each case — like $37.9 billion for Google’s all-important search business this quarter compared to $35.8 billion last quarter. (It’s the jump year-over-year that’s boggles the mind: search is pulling in $11 billion more this year than it did last year at this time.)
YouTube advertising revenue went up from $7 billion last quarter to a record $7.2 billion this quarter, despite some fears that Apple’s iOS Ad Tracking Transparency would have hit YouTube like it hit Snap as users get the ability to easily opt out. But it sounds like YouTube would have seen even bigger gains without the feature; CFO Ruth Porat reportedly said it had a “modest” impact on ad revenue. Last quarter, we saw YouTube revenue nearly double year over year and add $1 billion over the previous quarter, so this isn’t quite as impressive growth.
Google Cloud is still not yet profitable, and is actually bleeding very slightly more, with operating losses of $644 million instead of the $591 million it lost last quarter. Still, cloud revenues grew by an entire $1.5 billion year over year to $4.99 billion from $3.44 billion in 2020, and that’s still an improvement over last quarter’s $4.6 billion in revenue as well.
As usual, the way Google reports earnings makes it impossible to tell whether its hardware products like the Pixel phone, Nest, Chromecast, and Android in general are doing OK or not. Android, Chrome and all of Google’s hardware initiatives are bundled into a catch-all “Google Services” category that includes big hitters like Search and YouTube.
One contributor to the growth: Google chief business officer Philipp Schindler explained on the call that while shoppers are returning to physical stores, the company’s also seeing “strong growth in local shopping queries” at the same time. CFO Ruth Porat says the growth is a combination of continued “broadbased” ad spending and continued consumer interest. (Both of these been high since the middle of the pandemic, but Big Tech has been doing fine throughout.) Porat says that Google expects less growth from the Google Play app store next quarter due to the impact of the new lower fees for subscription apps that it announced last week.
Google is facing down a bevy of antitrust lawsuits arguing that at least some of its profits are ill-gotten gains. They suggest Google boosted its own ad buying system over competitors, that it tracked users even in incognito mode, collected location data even after users turned off location sharing, tried to pay off phone makers and app developers, and more. Most recently, it was accused of throttling webpage load speeds to promote its own AMP competitor.