As the tech firm nears 25, investors and executives alike look for fresh sources of growth
, codenamed Gemini, is proceeding apace. Having nearly fallen below $1trn in November, Alphabet’s market value is back up to $1.7trn. Crisis over?
Given these eye-popping numbers, it may seem churlish to ask why Alphabet isn’t doing better. In fact, the question is warranted, and is being asked by Mr Pichai, his underlings and investors alike. The company finds itself at a delicate juncture—not only, or even primarily, because of. The core digital-ads business is maturing, with sales growth no longer consistently in double digits and increasingly tied to economic cycles.
Although search remains immensely lucrative, with operating margins of nearly 50%, according to Bernstein, a broker, how people look for things on the internet is changing. Most product searches these days start not on Google but on Amazon, the e-commerce giant. According to Google’s own executives, 40% of teenagers and young adults seek recommendations for things like restaurants or hotels on TikTok, a short-video app, or Instagram, a similar app from Meta.
Most of the moonshots look as commercially questionable as the Apollo programme. Other Bets, the bit of Alphabet where most of them sit, haemorrhages money. Between 2018 and 2022 it notched up a cumulative operating loss of $24bn, more than six times bigger than its total revenues in that period . Other Bets consumes at least some of its parent’s capital spending, which ate up $31bn last year, and a material slug of its $40bn annual research-and-development budget.
In finance, Google offers a digital wallet, has invested in Lending Club, a peer-to-peer lender, and owned price-comparison sites for insurance and mortgages, which it shut down in 2016. These efforts are unambitious compared with those of Apple, which offers a credit card and has launched a buy-now-pay-later scheme.
Some of this looseness is by design. Messrs Brin and Page wanted to nurture a startup culture that allowed brilliant ideas to bubble up. And they do: one of those presented at the developers’ conference came directly from a five-person team. But clever products often get tied up in compliance reviews.
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