European Union hits Google with $5 billion fine over Android antitrust practices
Google parent company Alphabet reported blockbuster second quarter earnings on Monday despite being hit with a major European antitrust investigation and $5 billion fine.
The Mountain View-based tech giant reported a net income of $3.2 billion, with non-GAAP earnings of $4.54 per share on revenue of $32.7 billion, when including traffic acquisition costs (TAC). Adjusted earnings, excluding the European Commission fine, were $11.75 per share.
On average, Wall Street was looking for Q2 earnings of $9.54 per share with $32.2 billion in revenue.
Net revenue excluding TAC was expected to be at $25.6 billion. Alphabet delivered slightly above target with $26.28 billion in revenue excluding TAC. Traffic acquisition costs accounted for 23 percent of Google ad revenues.
Google revenues, which include the company's enterprise cloud, software, and data management products, attributed most of Q2 sales with $32.5 billion in revenue. Google's Other revenues --which now includes the smart thermostat business Nest -- were $4.23 billion.
Revenue in Alphabet's "moonshot" Other Bets category came in at $145 million with operating losses rising to $732 million. Alphabet recently moved its Loon balloon internet project and Wing autonomous drone initiatives under the Other Bets group, alongside Waymo, Fiber, Verily and cybersecurity outfit Chronicle.
Google's cost-per-click, which is how much it makes off each advertising click, decreased 22 percent year over year and 10 percent quarter over quarter. The company's total advertising revenue was $28.1 billion, up from $22.7 billion a year ago.
As for the EC fine, the European Commission charged Google $5.07 billion for breaching EU antitrust rules by imposing restrictions on Android device makers and network operators "to cement its dominant position in general internet search".
Google must now bring this conduct to an end within 90 days or face penalty payments of up to 5 percent of the average daily worldwide turnover of Alphabet, the EC said. Google has said it will appeal the EC decision.
Shares of Alphabet were up around five percent in after hours trading.