A global pandemic and ransomware explosion makes for a bumper quarter at Google parent Alphabet

Chief exec Pichai wants to 'help people get the information they need,' even as YouTube fingered for conspiracy guff


Google parent Alphabet has reported financial success across everything from artificial intelligence to video streaming – thanks in no small part to the pandemic and increased efforts from ransomware ne'er-do-wells.

Revenues for Google's Q2 of fiscal 2021 ended 30 June jumped a whopping 62 per cent year-on-year to $61.88bn, and it reported an operating profit of $19.36bn versus $6.383bn in the corresponding quarter in 2020.

"I want to acknowledge that the new COVID-19 variants have been challenging for so many communities across the world," Alphabet chief Sundar Pichai told attendees on the company's earnings call, despite the positive effect the pandemic appears to have had on the company's ever-expanding top and bottom lines.

"As the pandemic evolves, we want to help people get the information they need to keep themselves and their families safe. I really encourage everyone to get the vaccine when it's available to you."

Pichai's statement flew in the face of continued issues surrounding its anything-for-views recommendation engines, particularly that which cues up videos on its YouTube streaming platform. A study released by Mozilla earlier this month found the YouTube recommendation engine all too often pushes ridiculous conspiracy theories – including those making unproven, potentially dangerous, and often downright whacky claims about the origins of COVID-19 or the safety of the vaccines developed to fight it.

Revenue generated by Google Search & other jumped 68 per cent to $35.84bn, YouTube ads were up 83 per cent to $7bn, and Google Network came in at $7.6bn, a rise on a year ago of 60.4 per cent. This meant Google's toal ad biz turned over $50.44bn, up from $29.86bn.

It's not just a little global pandemic that has been good for business, either – so has the growth in ransomware. "The increase in cyber and ransomware attacks is a wakeup call for the industry," Pichai said during the call. "Over the course of the last couple of years, with the recent attacks, [companies] have really started thinking deeply about the vulnerabilities.

"Supply chain security has been a major source of consensus, particularly over the past few quarters. Cyber threat, increasingly, is in the mind of not just CIOs, but CEOs across our partners. And so it's definitely an area where we are seeing a lot of conversations, a lot of interest. It's our strongest product portfolio, and we are continuing to enhance our solutions."

Pichai also claimed the company to be "reimaging the future of work with flexibility as a guiding principle," highlighting how services like Google Workspaces have helped with fully remote and hybrid working – but admitted to being "excited to see so many people in person as we started a voluntary return to our California offices recently."

Alphabet's executives also had plenty to say about the company's investments in artificial intelligence, including its Waymo autonomous driving division. "These are driverless rides and no one else in the car other than the passengers," Pichai explained, "and people have had a very positive experience overall. We are obviously with a strong focus on safety. We're looking to scale it up.

"Through it all, we are building newer capabilities as well investing in next-generation hardware and software. So it's an iterative process, and at each step, it's very clear to us that we are ahead, and we are making progress, and you'll see us continue to invest here, with a focus on safety first, and I expect this to scale up more through the course of 2022."

Google's 'other' section generated $6.62bn in sales, Google Services revenue was up to $6.6bn from $5.12bn, Google Cloud – which has a new boss in EMEA – reported a 53 per cent jump to $4.62bn, and Other Bets – Waymo etc. – was up to $192m versus $148m. Waymo has been running driverless car trials in Phoenix, Arizona, since October.

CFO Ruth Porat said Google Cloud Platform outgrew the Cloud division overall, but didn't give a clearer breakdown. Google Workspace grew in terms of seats and average revenue per seat. Operating losses for Google Cloud narrowed to $591m from $1.4bn a year earlier.

"Across Cloud, we will continue to invest aggressively, given the opportunity we see," she said. The biggest cloud providers benefited from the dynamics of the lockdown, a trend that continues.

Anyone looking for a job, meanwhile, could do worse than stick their CV in Alphabet's inbox. The company hired a whopping 4,061 new staff in the quarter just gone, and intends to increase the rate at which it's hiring still further – a traditional Q3 uptick, Porat explained, focused primarily on graduates.

"We also began to increase the pace of investment in ground up construction and fit outs of office facilities," Porat added, "which were slowed due to COVID." Between this, increased research and development costs, and the boosted headcount, the company's operating expenses grew 22 per cent to $16.3bn – not quite enough to take the shine off its revenue growth by denting margin.

Overall, Alphabet posted a big jump in operating margin from 17 per cent the year before to 31 per cent this quarter. Net profit was $36.45bn, up from $13.79bn. Despite these results, investor confidence seemed muted. Alphabet's share price rose just 1.69 per cent in pre-market trading, not enough to wipe out a 2.04 per cent decline at close.

Alphabet had not responded to a request for additional comment by the time of publication. ®

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