With a market capitalization nearing $2 trillion, Alphabet is about as far from a start-up as is possible. Like Amazon and Facebook, it is frequently criticized for wielding its power unfairly, a charge the companies deny. Bills introduced in the U.S. House would restrict the big tech firms, and President Biden has named critics of Big Tech to key regulatory positions.
The pandemic profits the companies are making will likely only increase calls for action.
“Regulators at the moment are probably the biggest potential roadblock for Alphabet,” said Dave Heger, a communications analyst for the brokerage Edward Jones. “But antitrust lawsuits will take years. In the interim the company will continue to grow and add value to advertisers. History is probably in its favor.”
Alphabet, like the other big tech companies that offer tools to communicate, shop, be entertained and work remotely, initially was seen as vulnerable to the pandemic. In the second quarter of 2020, the first full quarter in which the virus was rampant, Alphabet’s revenue was off a bit as advertisers recalibrated. But it wasn’t down by much and it didn’t last.
As advertisers realized the world would not end, they returned in force. This helped not only Google’s main search engine but also the YouTube video division. YouTube’s ad revenue was up 84 percent in the second quarter from the same period in 2020. In a conference call on Tuesday, Google executives talked about how the pandemic had pushed YouTube into becoming more of an e-commerce site.
Even the cloud storage business, where Alphabet is a perennial also-ran to Amazon and Microsoft, did well: Revenue jumped 50 percent and losses slowed.