Alphabet Inc. (NASDAQ: GOOGL), the parent of Google, posted better-than-expected earnings. Revenue in the second quarter rose from $26.0 billion last year to $32.7 billion this year. Much of the success was driven by revenue from Google properties, which are accounted for separately from the revenue it gets from other businesses that use its products.
Revenue from these Google properties rose from $18.4 billion in the year-ago period to $23.2 billion in 2019. Almost all of this is from search. The appetite for information available via search on the internet is growing rapidly.
People use the internet for much more than asking and answering questions. A lot of the time people and companies spend is with video programming. Communication, via text or social media, also takes up hours and hours of many people’s time each week. Search, in other words, has plenty of competition.
Management tried to pull investor interest away from search during the company’s earnings call. The focus, executives said, should be on cloud computing, YouTube and hardware. However, Sundar Pichai, CEO Google, could not avoid the search question from investors. He made this point:
So, on, you know, on desktop search sorry, your question on the user experience on desktop search, how do we see improvements? You know, look, I mean, the same first of all, users are having cross device experiences, cross screen experiences, right? So I think your desktop search experience, mobile search, everything goes hand in hand. And every you know, all the work we are doing to make mobile search better translates to desktop search as well. Areas where desktop search historically has been a bit behind is in terms of things like identity and payments and having all that work well to enhance the user experience. And with Chrome now, we’re investing a lot in those areas as well, and I think that will contribute overall to improvements there.
Without search, Alphabet could not dream of a future driven exclusively by cloud, YouTube and hardware revenue. Search is still rising, and rising quickly. That means the finite amount of time people have to use the internet continues to be time spent on questions and answers — the basis of the founding of the company, and still by far its largest and growing business.