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Google-owner Alphabet posts surge in first quarter profits as ad revenues grow

Published: 10:54 24 Apr 2018 BST

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The company faces tighter regulation on internet privacy and content

Google owner Alphabet Inc (NASDAQ:GOOG) achieved a 73% surge in first quarter profits after advertising revenues jumped. 

Net income rose to US$9.4bn in the three months to March 31 from US$5.4bn a year earlier, beating analysts’ expectations of US$6.56bn.

Revenue increased 26% to US$31.1bn from US$24.8bn, boosted by growth in ad sales at its Google and YouTube businesses.

However, rising costs shrank the operating margin to 22% from 27% a year ago.

Alphabet has been investing in new ventures beyond its core Google search engine business, including new projects in cloud computing and hardware as it tries to keep pace with rising competition from the likes of Amazon.com Inc (NASDAQ:AMZN). 

Regulatory crackdown on internet giants

Concerns about the costly new projects and tighter regulation on privacy and content have weakened investor appetite recently.

The European Union’s new General Protection Regulation (GPR) is due to come in on May 25, giving the public more control over their data and raising fines for data breaches.

The new rule comes in the wake of a data breach at Facebook. Political consultancy Cambridge Analytica is accused of using information from millions of Facebook profiles without permission.

US lawmakers initially sought to question Google alongside Facebook at a hearing this month but was later excused.

Like Facebook and other internet giants, Alphabet has been under pressure by lawmakers to change its business practices to protect consumers and their privacy.

The group has also previously drawn criticism over how it controls extremist content on YouTube as well as the way it displays results on the Google search engine.

READ: Google apologises to clients over extremist content after M&S becomes latest brand to pull ads

Last year, several advertisers pulled ads from YouTube after ads appeared alongside extremist or hate videos on the video sharing site, prompting Alphabet to make changes to its technology and how it controls content. 

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