Google’s Parent Company Suffers More Than $1 Billion In Losses Thanks To YouTube’s Major Shortcomings

Google’s parent company Alphabet has reported a staggering loss in profits this year due to YouTube’s shortcomings in revenue. The platform’s somewhat disappointing results pulled Alphabet’s profits down and that, in turn, led to an overall fall in total income.

While the year 2021 may have been Alphabet's year with annual revenues reaching up to $257 billion, the same cannot be said for 2022.

This is because the expenses incurred from the previous year are certainly up and that leaves the firm with net profits totaling just $16.4 billion in comparison to last year’s $17.9 billion.

The impact of inflation has been massive on the company, where costs went up by more than $1 billion when compared to the previous year to reach $9.1 billion.

A recent report by NYT shed light on how the company’s shares received a $4.8 billion increase while in the next year, there was a $1.07 loss- a striking difference between the two.

Other significant findings in this year’s Q1 included a gain of $39 billion in terms of search businesses when compared to last year’s $31 billion. This included the likes of Google Search and YouTube.

While the revenue generated by YouTube’s advertising may have may be up from the previous year, it fell short of the growth anticipated by numerous analysts. Moreover, the prices of shares also fell short by nearly 7%.

To be more specific, YouTube’s advertising revenue was expected to hit the 25% mark but the figures could only reach 14%. With YouTube being Alphabet’s main growth engine, there was plenty riding on their performance.

Clearly, the major miss in targets resulted in the steep fall for Alphabet’s stock but even more striking was the miss in both revenues as well as earnings.

These are obvious signs of how big of role inflation is playing on YouTube’s numbers as there are more concerns about worsening economic conditions. For instance, Snapchat’s CEO, Evan Spiegel revealed how the challenges for his firm were nothing less for this year’s Q1 as they anticipate weaker sales for the upcoming quarter.

But what could potentially be the reason behind YouTube’s shortfall? Well, the forecast reports from analysts revealed how the increased level of competition by TikTok and services like Disney+ were to blame.

Sundar Pichai who is the CEO of both Google and Alphabet mentioned in a recent statement how growth was seen with both Cloud and Search. Therefore, he outlined their integral role in assisting firms and users in their digital transformation. Hence, the company plans on carrying out additional similar investments while making more opportunities to ensure the growth of the local community.

Similarly, Pichai shed light upon how great investments were being made with YouTube Shorts as daily views generated have surpassed the 30 billion benchmark. To be more specific, this is almost four times greater than that seen in 2021.

Therefore, Shorts could be viewed as having great potential in the future while serving as firsthand rivals for competitors like Reels from Instagram, TikTok, and SnapChat too.

Earlier this year, we saw YouTube’s chief product officer mention a number of leading changes including updates for YouTube Shorts. The only problem is that it is only in its early monetization phase. This is why Pichai spoke of some great opportunities relating to how creators could benefit from money-making through the app with examples like branded content and shopping experiences.

On the other hand, Alpha’s CFO, Ruth Porat mentioned how YouTube’s revenue was also hit by a number of alterations made to the current digital advertising market. This includes changes in iPhone’s privacy, inflation, shortage in labor, increasing interest rates, and disruptions in the supply chain too. Let’s not forget how Google has pulled out of the Russian-Ukrainian region due to ongoing conflict which also impacted YouTube’s revenue.

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