One Google search that would have proved fruitless before Monday's earnings would have been for a breakdown of revenues earned by YouTube and Alphabet's growing cloud business.
Alphabet disclosed those numbers for the first time, in what investors hope will be an era of greater transparency under new chief executive Sundar Pichai.
Richard Waters reports the cloud division is rapidly turning into Google's most promising business beyond advertising. Its revenue grew 53 per cent in the latest quarter, to $2.6bn. However, this fails to match Microsoft's 62 per cent growth just announced and the business is only about the size of Amazon Web Services' five years ago.
Meanwhile, YouTube’s annual advertising revenue topped $15bn last year after rising 36 per cent, and accounted for almost 14 per cent of total advertising from Google’s own properties. Impressive, but this business is around 30 per cent smaller than analysts had been guessing.
What Alphabet did not disclose was profit numbers for the two businesses, but it's clear that the cloud can be another pillar of growth and YouTube has both advertising and subscription strengths. We learnt YouTube Music has around 20m subscribers, YouTube TV has about 2m and overall subscription revenues were around $3bn.
In contrast, hardware is an area of weakness currently. Alphabet shares are down 3 per cent today after it missed revenue expectations, with the company partly blaming lower hardware numbers compared to the year before, when its Pixel smartphone had seen a jump in sales.
The Internet of (Five) Things
1. Big Tech targeted by Germany
Germany’s government has proposed a clampdown on anti-competitive behaviour by digital platforms, putting Berlin in the vanguard of European efforts to regulate Big Tech. The draft “digital law” will strengthen the intervention powers of Germany’s competition watchdog, the Federal Cartel Office. Peter Altmaier, the economy minister, said the measures would “toughen control of abusive practices for big market-dominating digital companies”. We also have the story of the controversy over Singapore's four-month-old law against “online falsehoods”, while email app maker Blix is suing Apple for allegedly copying its app and has called on other small companies to rise up against what it claims are strong-arm tactics by the iPhone maker
2. Tesla on a tear
Tesla jumped as high as 17 per cent on Tuesday, extending a vertiginous stock spike that has made it the world’s second-largest automaker by market value. The stock, which has more than doubled since December, surged to $912 in morning trade. It was given a boost after the company last week reported a $105m profit for the fourth quarter, prompting short-sellers to rapidly claw back bearish bets on the electric car maker.
3. Micro Focus loses more over Loosemore
While Elon Musk's personality can sometimes power Tesla's stock price, the UK's Micro Focus saw its shares plunge in the opposite direction on Tuesday as it lost its own charismatic leader. Executive chairman Kevin Loosemore has left after 15 years as it continues to struggle with its reverse takeover of Hewlett-Packard’s software assets. The stock fell another 16 per cent on Tuesday and it is 70 per cent off its 2017 peak, notes Lombard.
4. Relx adds Emailage to its Inbox
Relx is to buy Arizona-based Emailage for about $480m, as the UK-listed information and analytics group deepens its push into the fraud prevention sector. Emailage uses machine learning, its own data and a global network of partner companies to help predict fraud associated with email addresses and online identities. The acquisition is the latest in a string of takeovers by the former Reed Elsevier in this area, including a $375m deal last month to buy San Diego-based ID Analytics and the 2018 purchase of ThreatMetrix for roughly £580m.
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5. The promise of synthetic data
Creating synthetic data is seen as a way of filtering anonymised data so it can't be linked back to people through crossmatching different data sets. Anjana Ahuja writes data scientists are becoming excited by its potential to squeeze useful information from tightly held databases. Uncovering fraud, for example, can be challenging because regulations restrict how information can be shared, even within banks. Synthetic data can help to unveil useful patterns, while masking individual incidents.
Tech tools — Shadow
The voting app Shadow is in the spotlight, with it being blamed for the counting chaos in the Iowa caucuses. Tim Bradshaw reports its developers say they are “campaign and technology veterans” who have worked for Hillary Clinton, Barack Obama, Apple and Google. “Our mission is to build political power for the progressive movement by developing affordable and easy-to-use tools for teams and budgets of any size,” its website says. Iowa won't go down as a great ad for that aim.
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