SAN FRANCISCO: Google’s EU antitrust fine dents Alphabet earnings but still amazes investors, as the €4.3 billion penalty wiped 60% of the giant’s quarterly profits.

Ironically, Google’s unexpectedly high revenue increase of 26%, was down to a strong background in smartphones – 80% of all smartphones run its Android OS – which was also the reason for the fine.   

“Google has used Android as a vehicle to cement the dominance of its search engine,” EU Competition Commissioner Margrethe Vestager said earlier this month.

“These practices have denied rivals the chance to innovate and compete on their merits.” Such practices included the requirement that phone manufacturers install both Google’s search app and Chrome browser as a condition of use for its Play Store.

Advertising growth drove Alphabet shares up 4% as investors looked past the fine, and admired how the company’s Android strategy gave it a guaranteed way of reaching smartphone users, according to the Financial Times.

The strength of Google’s most recent result come from a 58% year-on-year increase in both mobile and YouTube advertising click-through rates. This led to a 24% surge in ad revenues.

Meanwhile, a recent investor concern in the form of Traffic Acquisition Costs, which had been increasing steadily, appeared to be allayed. This quarter actually saw a slight decline, to 22.8% of ad revenues from 23.6% in Q1.

Despite the fine, which affected profits, the business’s vital signs remain incredibly strong. Not least net revenue growth, which jumped 25% compared with the previous quarter – the fastest growth rate in four years.

Google’s health stands largely at odds with the rest of the industry, however. “Between Google and Facebook, the two of them keep taking share of an industry that doesn’t grow as much as they are,” said Pivotal Research analyst Brian Wieser, in comments reported by the Wall Street Journal.

Responding to questions about future changes to the Android business, Google’s CEO, Sundar Pichai said he was working to “find a solution above all that preserves the tremendous benefits of Android to users,” a service, he said, that “creates more choice for everyone, not less.”

Sourced from Financial Times, Wall Street Journal, WARC; additional content by WARC staff