Alphabet Inc. -
The three months to September 30 were very handsome indeed for Google's parent organisation. The second largest publicly listed company on earth (by market capitalisation) raked in $27.2b. That's a jump of $5b over the same quarter last year. In fact, 2017 on the whole
has been a delight for investors; shares have climbed 25% since the beginning of the year.
Google, first amongst Alphabet's children, continues to power ahead. A glowing report from Chief Financial Officer Ruth Porat praised strong performance
from the advertising business and particularly YouTube. Google Chief Sundar Pichai was similarly disposed.
For the first time ever Porat also highlighted the health of Alphabet's other 'Bets'
, like Waymo (self-driving cars) and Nest (thermostats and other smart home devices). And as has been the case for several quarters now, Alphabet's huge investment in DeepMind continues to push the envelope in artificial intelligence. And while it was not broadly explored in these earnings, one can also clearly infer Alphabet's desire to attack Amazon and Microsoft
in the business web services market through its partnership with Cisco.
Why does any of this matter? Because these figures and plans bring into sharp relief the world's efforts to rein-in the behemoth. Against the backdrop of Alphabet's earnings, the billion dollar fine that European anti-trust regulators slapped on Mountain View earlier in the year seems laughable. And yet, there are concerns within the company about margins. Google's Traffic Acquisition Costs are soaring, as are its payments to other technology partners. And Amazon has entered the advertising business. Sir. Martin Sorrell (CEO of WPP - one of the world's biggest ad agencies) estimated that Amazon may have taken as much as $2.5b out of the ad. market last year.
The King Kong to Google's Godzilla, Amazon also released a stunning set of numbers for the quarter: revenue was up 34% for the quarter (a cool $43.76b
). Its tenth consecutive quarter of profit growth bought home $256m for the company. Similar to Google, Amazon has enjoyed a boost in share price by some 29% since the year started.
Depending on where you are in the world Amazon means something different. In America you've probably shopped online there for years and may also now peruse the aisles of Amazon Fresh. Outside America you may own an Alexa home assistant or watch Amazon Studios content on its streaming service Prime. And if you like reading e-books, you most likely also have a kindle device or the kindle app installed on your phone or tablet.
But no matter where you are, one thing is certain. You've spent time (and probably lots of it) on websites that are hosted by Amazon Web Services, the architecture that keeps large sections of the internet operating. It's one of the lesser-known Amazon products (at least outside the tech world) but AWS is also now one of the big earners: it bought in $4.6b for the quarter, up from $3.2b this time last year. So Amazon is not only taking over the internet, it is also taking over the services that power the internet. This is exactly the pie that Google and Cisco want a piece of.
Amazon has also quickly absorbed the $13.7b price tag that came with its Whole Foods purchase and it remains dogged in its pursuit of breaking open new markets. The pharmaceutical industry was shaken by reports that Amazon may be pursuing licenses to retail medicine both online and in-store. When companies the size of Bayer are warning of, 'the Amazon effect', we should all take heed.
Recent efforts by cities around the US to woo Amazon as it plans to build its second headquarters are but one example of the sway that these massive companies hold over society. Elsewhere investigations and revelations continue as to the roles of Google and Facebook in the propagation of false information in the lead-up to the US election. And Apple gears up for yet another cycle of scintillating sales with the release of the new iPhone X.
The money, the influence, and the opportunities wielded by these enormous organisations means that in many ways they are already beyond the control of national governments. Left to their own devices (no pun intended) they will undoubtedly try to clobber each other in an unending battle for global dominance, but one wonders what the fall-out might be. Particularly when they come up against the might of China's giants - Tencent, Alibaba, Baidu and Xiaomi.