Google’s Gold Mine

The internet company is combating a decline in its most important commercial activity, advertisements next to its search engine results. It is an alarm bell that reaches well beyond Google.

The quarterly report from Google’s parent company, Alphabet, contains a lot of bad news. A clear disappointment for the American internet giant is that its video site, Youtube, which had long been accustomed to rapid growth, now must deal with declining profits. More unsettling, however, is the development in the core business with ads that are placed next to results in Google’s search engine.

These search ads have long been the company’s gold mine and, until now, they have been considered an income source much more resistant to crises than other advertising formats. They are also barely impacted by stricter data regulations on Apple devices such as the iPhone, which are currently causing significant headaches for Facebook’s parent company, Meta, in its advertising business.

But now, Google’s profits in this arena have also taken a hit. In a difficult economic climate, advertisers in some branches have become much more cautious with their budgets. That is an alarm bell which reaches far beyond this internet company.