Sales, which was about $63.1bn in the fourth quarter excluding partner payout, fell short of the projected $63.2 bn projected by analysts according to data compiled by Bloomberg.
Google, which also reported a decline in operating profit margin as the cost growth exceeded the revenues generated, leading to a 32% fall in earnings per share at $1.06 was expected to be $1.18 according to projected numbers on Wall Street.
Advertising which is a vital part of Alphabet’s revenue has now fallen to $59bn from $61.2bn recorded a year ago while revenue for Google search fell to $42.bn from $43.3 bn in 2021’s fourth quarter while sales from YouTube ads were down to $7.96bn from $8.63bn from a year ago.
Alphabet has also disclosed that it is expected to incur costs of $1.9bn-$2.3bn due to job cuts as well as $500m from reducing its office space, which most of it would experience in the first quarter of this year.
This decline experienced at all fronts comes as a result of threats that have come upon Google’s core advertising business when the US Department of Justice called for a breakup of the search giant’s ad-technology business due to alleged illegal monopolization of the market. Advertising, the technology behemoth’s major source of revenue may now be under attack from new entrants.
However, Alphabet CEO, Sundar Pichai has expressed many hopes on its investment in Artificial Intelligence saying “Our long-term investments in deep computer science make us extremely well-positioned as AI reaches an inflection point.”.
Pichai added, “There’s also great momentum in Cloud, YouTube subscriptions, and our Pixel device.”.
Alphabet also disclosed that starting this year, DeepMind, a division focused on AI research, will now be included in Alphabet’s corporate costs which will reflect how the technology is being added into other businesses instead of as part of “Other Bets”.
Pichai also expressed excitement about Google’s new approach to AI. He said, ““I’m excited by the AI-driven leaps we’re about to unveil in Search and beyond,”.
Google intends to make artificial-intelligence-based large language models like LaMDA available “in the coming weeks and months,”. He shared these comments with analysts.
Users can also use language models “as a companion to search”.
This recent development comes amidst several challenges that have faced Google, like its recent decision to lay off 12,000 jobs or 6% of its global workforce, which is the largest layoff that has ever happened in its history.
Pichai said, “We’re on an important journey to re-engineer our cost structure in a durable way and to build financially sustainable, vibrant, growing businesses across Alphabet,”.