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New Alphabet CEO, same old ABCs

February 4, 2020, 1:29 PM UTC

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Good morning, Data Sheet readers. Tech writer Danielle Abril here filling in for Adam Lashinsky. 

Did you catch Alphabet’s earnings yesterday? It was the first time Sundar Pichai spoke publicly as top dog. In December, Pichai was promoted from CEO of Google to head of Alphabet to much fanfare and speculation about the direction of the company.

And you know what Pichai told us about how the leadership change will impact that future? Nothing. Nothing at all.  

“Before I talk about highlights of the quarter, I want to step back and give some early thoughts to my approach to managing Alphabet and other bets,” he said, only to repeat familiar goals of long-term growth, investments in artificial intelligence, and cloud expansion in his characteristic monotone.

Though Pichai gave little insight into what changes may result from the leadership change (he revealed a little more to Adam), he did offer up numbers Alphabet has never previously released: revenue totals for the company’s cloud computing business and YouTube ads.  

I covered those numbers yesterday, along with Alphabet’s fourth-quarter earnings. While the rates at which YouTube and Google’s cloud business are annually growing (36% and 53% respectively) are very positive, it’s important to remember that together both represent only 15% of Alphabet’s overall revenue.  

“It’s essentially a rounding error,” Brent Thill, analyst at Jefferies, told me after Alphabet’s earnings came out. 

Meanwhile, the biggest chunk of Alphabet’s $161.9 billion revenue—its main ad business—is slowing. The latest results, up 17%, represent the company’s slowest quarter of revenue growth since 2015.  

Alphabet’s results wrap up the quarterly earnings for the FAANG companies. Here’s how that played out: Apple and Amazon had better-than-expected holiday seasons, which boosted both stocks. Netflix also beat projections, giving its stock a slight bump, but cautioned that lighter subscriber growth was ahead.   

But ad-based companies Google and Facebook suffered from the same downfall: a slowdown in revenue growth. And both stocks dropped following fourth-quarter earnings. 

Coincidence? It’s too early to tell. But as regulations and privacy measures kick up, the two behemoths will be challenged to prove they can still deliver a return for advertisers.  

It’s a tall order that may take some time to remaster. So perhaps Pichai’s even-keeled, long-term approach may come in handy after all.  

Danielle Abril

Twitter: @DanielleDigest


This edition of Data Sheet was curated by Aaron Pressman.


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Aaron Pressman

On Twitter: @ampressman