EU fine on Google weighs on parent Alphabet profits

An illuminated Google logo is seen inside an office building in Zurich, Switzerland December 5, 2018. (REUTERS)
Updated 30 April 2019
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EU fine on Google weighs on parent Alphabet profits

  • Including the European fine, net income was $6.7 billion, or $9.50 per share, compared with analysts’ average estimate of $7.3 billion, or $10.48 per share

SAN FRANCISCO: Google parent Alphabet on Monday reported that profit in the first three months of this year sagged under the weight of a hefty antitrust fine in the European Union.
Alphabet said that profit in the first-quarter fell 29 percent to $6.7 billion on revenue that climbed 17 percent to $36.3 billion.
The earnings took a hit from a European Commission fine that amounted to $1.7 billion at the end of March, according to the quarterly update.
Google shares were down 7.2 percent to $1,202.39 in after-market trades that followed release of the earnings report.
Though profits excluding the one-time costs were better than expected, revenue growth was below forecasts for the technology colossus which is the dominant Internet search company and operator of the ubiquitous Android mobile operating system.
Chief financial officer Ruth Porat said in the release the results showed “robust growth” led by mobile search, ad revenues from YouTube videos and cloud computing.
“We remain focused on, and excited by, the significant growth opportunities across our businesses,” she said.
Google’s lucrative advertising platform remained the largest revenue driver for Alphabet, delivering more than $30 billion of revenues, but costs rose sharply as well.
Investors seemed concerned that earnings figures showed the growth rate of ad clicks slowed while the trend toward lower-priced mobile ads continued.

The California giant showed widening losses for its “other bets” including the Waymo self-driving car project, Verily life sciences and services for Internet for remote parts of the world and drone delivery.
“Other bets” showed an operating loss of $858 million, up from $571 million a year ago while revenues rose modestly to $170 million.
Some of the projects are moving closer to fruition: Wing became the first drone delivery company to receive air carrier certification from the US Federal Aviation Administration. Waymo has begun a limited rollout of its robotaxis in Arizona in partnership with automakers.
And, while the company’s Pixel smartphones have seen traction slowed by heavy competition in the premium handset market, it was pleased with momentum for Home devices infused with digital assistant software.
Porat teased a hardware announcement along those lines at Google’s annual developers conference next week in its home town of Mountain View, California.
It is seeing growth in cloud computing for businesses, a market where Google is competing against Amazon, Microsoft and others.
“Google Cloud Platform remains one of the fastest growing businesses in Alphabet with strong customer momentum reflected in particular in demand for our compute and data analytics products,” Porat said in a call with analysts.
Google planned to continue investing heavily in data centers, engineers, and digital content for streaming video offerings at YouTube.

But Google continues to face pressure around the world from regulators, notably in Europe amid multiple investigations over alleged abuse of its dominance in Internet search, advertising and its mobile system.
The latest fine imposed by Brussels cited Google’s AdSense advertising service, saying it illegally restricted client websites from displaying messages from ad service rivals.
Google is separately working to satisfy EU regulators investigating its hugely popular Android devices following a $5 billion fine last year.
This month, Google said it would offer smartphone users five browsers and search engines as part of the company’s effort to meet EU competition concerns.
Brussels accused Google of using the Android system’s dominance of smartphones and tablets to promote the use of its own Google search engine and Chrome browser and shut out rivals.
In the United States, Google has been a target of President Donald Trump and his allies, accusing the search giant of “bias” and silencing conservative voices, claims denied by the Silicon Valley firm.
 


EU adopts powers to respond to cyberattacks

Updated 17 May 2019
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EU adopts powers to respond to cyberattacks

  • The EU can now impose asset freezes and travel bans on individuals, firms and state bodies implicated in cyberattacks
  • Sanctions will be considered if a cyberattack is determined to have had a ‘significant impact’ on its target

BRUSSELS: The European Union on Friday adopted powers to punish those outside the bloc who launch cyberattacks that cripple hospitals and banks, sway elections and steal company secrets or funds.
EU ministers meeting in Brussels said the 28-nation group would now, for the first time, be able to impose asset freezes and travel bans on individuals, firms and state bodies implicated in such attacks.
“The Council (of EU countries) established a framework which allows the EU to impose targeted restrictive measures to deter and respond to cyberattacks,” it said in a statement.
It added that sanctions will be considered if a cyberattack is determined to have had a “significant impact” on its target.
The goal is to bolster the security of EU institutions, firms and individuals against what Britain called an increase in the “scale and severity” of cyberattacks globally.
“This is decisive action to deter future cyberattacks,” British Foreign Secretary Jeremy Hunt said after Britain and its EU partners drafted the measures.
“For too long now, hostile actors have been threatening the EU’s security through disrupting critical infrastructure, attempts to undermine democracy and stealing commercial secrets and money running to billions of euros,” Hunt said.
“Our message to governments, regimes and criminal gangs prepared to carry out cyberattacks is clear,” Britain’s top diplomat added.
“Together, the international community will take all necessary steps to uphold the rule of law and the rules based international system which keeps our societies safe.”
The British government has pledged to continue close cooperation with the EU after it leaves the bloc in line with the 2016 referendum.
Under the sanctions regime, diplomats said, the 28 EU countries would have to vote unanimously to impose sanctions after meeting a legal threshold of significant impact.
For example, countries would look at the scope and severity of disruption to economic and other activities, essential services, critical state functions, public order or public safety, diplomats said.
They would examine the number of people and EU countries affected and determine how much money, intellectual property and data have been stolen.
EU diplomats told reporters it could also cover the hacking of European elections by a third party or country. Elections for a new European Parliament take place May 23-26.
In line with US intelligence assessments, EU officials highlight in particular the threat of disinformation and election hacking from Russia.
EU countries would also study how much the perpetrator has gained through such action.
A Dutch diplomat told reporters that the powers amount to a “big step forward” toward building a more secure cyberspace.
European leaders in October had called for a regime to impose sanctions against cyberattacks.
US and European police said Thursday they have smashed a huge international cybercrime network that used Russian malware to steal 100 million dollars from tens of thousands of victims worldwide.
EU diplomats said the bloc will now start drawing up a blacklist for potential sanctions in cyberattack cases.
A number of powerful people close to Russian President Vladimir Putin appear on a blacklist of 164 Russians and Ukrainians that was established after Moscow’s annexation of the Crimean peninsula in 2014.
Those blacklisted are under travel bans and asset freezes just like those that would be imposed on those implicated in cyberattacks.