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Google Reports Net Income of $5 Billion Last Quarter, Singles Out YouTube Advertising Revenues

On revenues of $22.4 billion, Alphabet, the parent company of Google -- itself the parent of YouTube -- and "Other Bets" (the company's catch-all for everything but Google and its subsidiaries) saw…

On revenues of $22.4 billion, Alphabet, the parent company of Google — itself the parent of YouTube — and “Other Bets” (the company’s catch-all for everything but Google and its subsidiaries) saw GAAP (generally accepted accounting principles) net income of $5 billion. 

Google itself had revenues of $22.2 billion, with operating income of $6.7 billion.

Those Other Bets — which include the Nest connected home division, healthcare company Verily, and the GoogleX “moonshot” division, among others — hit an operating loss of $865 million on revenues of $197 million. Ruth Porat, Alphabet’s CFO, urged listeners on the earnings call to look away from quarterly earnings on Alphabet’s wider net of companies, saying most are long-term investments and don’t operate conceptually on a tri-monthly basis.


Porat also pointed to the “significant rate” of YouTube’s revenue — those numbers aren’t broken out, though Google posted ad revenues of $19.8 billion, with $4.1 billion in traffic acquisition costs — mostly through increases in its advertising (which users have no doubt taken notice of). Those revenues are the reason behind the music industry holding the video giant over the coals throughout this year, over what they refer to as the “value gap” — that is, the value they feel they provide YouTube versus the returns that rights holders receive, which they claim are below market value.

Sources have told Billboard in the past that Google Play Music, the company’s music streaming service, has relatively low subscriber numbers compared to that of Apple Music and Spotify.

Over this past quarter, Google has also introduced a slew of hardware including a well-received smartphone, the Pixel, and a “smart speaker,” called Home, meant to compete with Amazon’s Echo.

The European Commission, the governing body of the European Union, recently announced its plans to examine and reform safe harbor, the legal mechanism by which many rights holders are said to contribute to the “value gap.”

YouTube recently hired industry veteran Lyor Cohen as its head of music; he is expected to begin in November, and his presence at the company as a liaison and strategist in the music business is, of course, still a mystery. One executive told Billboard that Cohen has “burned all of his relationships in the business,” one executive says, “so I can’t imagine it’s going to help YouTube [to foster better industry relations]. There’s no good will there.” Another characterized it as “a strong statement about trying to find a model for everybody, because you know that’s [Cohen’s] heart is in the development of artists. That’s who he is.”

The company has 69,953 employees.