SAN FRANCISCO — Google continues to flourish as it adapts to a significant transition toward artificial intelligence while confronting challenges from regulators aiming to dismantle its online dominance.
The latest signs of Google’s success surfaced on Tuesday with the release of Alphabet Inc.’s earnings report for the third quarter of the year. Both profit and revenue for Alphabet outpaced analysts’ forecasts, thanks mainly to the impressive performance of Google’s widely used search engine.
In the most recent quarter, Alphabet reported earnings of $26.3 billion, translating to $2.12 per share, marking a 34% increase compared to the previous year. Revenue also grew by 15%, reaching $88.27 billion for the same period.
The profits could have been even higher if not for Google’s significant investments in enhancing its artificial intelligence capabilities, competing fiercely with other major players like Microsoft, Amazon, Apple, Meta Platforms, and the rising entity, OpenAI. The surge in AI investments led to a striking 62% increase in Google’s capital expenditures, which soared to $13.1 billion compared to the previous year.
Following these results, investors reacted positively, pushing Alphabet’s stock up by nearly 4% during after-hours trading.
Nevertheless, a four-year-old antitrust lawsuit filed by the U.S. Department of Justice has created concerns about Google’s future. After examining evidence during a prominent trial last year, a federal judge ruled that Google’s search engine operates as an illegal monopoly, paving the way for potential significant changes. Recently, the Justice Department indicated it might pursue breaking up Google, a decision that U.S. District Judge Amit Mehta is expected to address next summer.
In addition to the scrutiny over its search engine, Google has been mandated to dismantle barriers surrounding its Play Store for Android applications. This ruling came earlier this month after a jury concluded that this operation also constitutes an illegal monopoly. Furthermore, Google is nearing the conclusion of another antitrust trial in Virginia, which focuses on the technology behind its digital advertising network.
To add to the mounting regulatory challenges, Google is undergoing a significant revamp of its search engine, increasingly highlighting results generated by artificial intelligence. This change is a response to competitive pressures from alternatives that are using similar cutting-edge technology.
For the time being, Google continues to stand as a robust financial force. Alphabet’s CEO, Sundar Pichai, expressed optimism with a statement highlighting the exceptional momentum across the organization.
