Why does Google Stay Behind Facebook?

Why does Google Stay Behind Facebook?

Last Thursday, Facebook (NASDAQ: FB), Apple and Amazon released their second-quarter earnings reports, exceeding past estimates. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) fell 3% the next day as peers rose. Alphabet was only one of the groups reporting decline income, with a 2% decline. As a result, earnings per share fell from $ 14.21 to $ 10.13 in the previous quarter. As marketers pulled spending back during the crash period, advertising was generally weak and was able to gradually increase advertising budgets when the economy reopened. However, Google's closest rival, Facebook, performed much better in the second quarter, and its revenue grew 11%, with 10% growth in the core advertising business. Facebook is smaller than Google, but its best competitor is rising rapidly, and Alphabet was almost in business revenue in the last quarter. The social media giant reported an operating profit of $ 6 billion versus Alphabet's operating profit of $ 6.4 billion. While the past quarter has been an anomaly, Facebook has been beating Alphabet for several years and may soon take the top in profit.

Google Cannot Escape the Macro Economy

Google has seen its revenue recover steadily throughout the quarter, but the company has been affected by the loss of advertisers in areas such as travel. Online travel agencies such as Booking Holdings and Expedia normally spend billions of dollars on Google ads each year, but as the demand for travel declined, marketing spending also closed. Analysts estimate that the trip covered 11% of Google's search revenue last year, making it an important market. Advertisers like Amazon also attracted advertising spending from Google. Alphabet's CEO, Ruth Porat, stated in his latest speech that the advertising business is closely related to the global macroeconomic environment and that this will improve like the economy. Facebook is also sensitive to the macro economy. Growth slowed from a year ago, but the company's strength in small businesses gives it an edge over Google. Facebook said that according to earnings, the top 100 advertisers accounted for only 16% of revenue in the second quarter and saw an increase in small businesses on its platform and now has a total of 9 million advertisers. The company faces many challenges, including the boycott, while its strength with small businesses provides stability against macroeconomic weakness, especially in areas such as travel.

Facebook Pursuing Investments That Unite People

In contrast, Facebook has growth initiatives in areas such as Oculus, Portal, payments, e-commerce, and with new features and investments in its four main apps Facebook, Instagram, WhatsApp and Messenger, it seems to better fit its mission of connecting people. On the other hand, Google has done little to change the user experience in the basic search functionality, and other recent work seems to have left the company's task to edit world knowledge. It's easy to see how apps like search and maps accomplish this goal, but businesses like Waymo, Google Cloud, and hardware like Chromecast seem to have little interest in organizing information. This is not the case with Facebook. Businesses that are both established and new products in the social media company are strengthening each other. It creates an ecosystem that benefits users and advertisers and increases the chances of success for new businesses like Facebook Stores.