(Kitco News) - During the latest earnings call from Alphabet, the parent company of Google, cited the pullback in the crypto market as an influencing factor in the decreased advertising revenues from Q2 2022.
The company released its earnings report for Q3 on Oct. 25, which detailed the 6% increase in revenue totaling $69.1 billion as compared to Q3 of 2021. This figure was down slightly from its Q2 2022 revenue of $69.7 billion.
While the revenue from its Google Services division, which includes advertising earnings, showed an increase from $58.8 billion to $61.3 billion over the past year, the company noted that the Q2 revenue was down quarter-on-quarter, and attributed it to weakness in advertising spending coming from the financial and cryptocurrency sectors.
“We did see a pullback in spending by some advertisers in certain areas in search ads,” according to Philipp Schindler, the chief business officer of Google, who spoke during Alphabet’s earnings call. “For example, in financial services, we saw a pullback in insurance, loan, mortgage and crypto subcategories.”
This is the first time that weakness in the crypto market has been attributed to declines in revenue from Google advertising, highlighting the increasing popularity of the crypto sector.
Google made changes to its financial products and services policy in July 2022 that brought more clarity to its requirements for advertisements related to cryptocurrency products and services. The update followed Google's previous decision to allow crypto-related advertising in August 2021 after previously banning them in June 2018.
Google settles with the DOJ
On the legal side of things, the U.S. Department of Justice (DOJ) and Google filed a joint stipulated agreement on Tuesday that brought a close to a dispute that has been ongoing in a California federal court since 2016.
The case centered around previous attempts by the DOJ to obtain data related to a criminal probe into the cryptocurrency exchange BTC-e, which Google was unable to supply.
BTC-e is a now-defunct crypto exchange that was shut down in 2017 after the arrest of Alexander Vinnik and other key staff members, who were subsequently charged with being involved in money laundering activities.
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In the resolution, which was signed by U.S. District Judge Richard Seeborg, Google admitted to a loss of data in response to the 2016 search warrant and has agreed to reform and upgrade its compliance program that deals with responses to legal demands such as subpoenas and search warrants.
According to the press release from the DOJ, Google has reportedly “spent over $90 million on additional resources, systems, and staffing to implement legal process compliance program improvements.”
Other stipulations include the requirement to bring on an independent compliance professional, serving as an outside third party, to assess Google’s adherence to the agreement and verify the accuracy of its update reports. All reports are required to be submitted to the government, the Google Compliance Steering Committee and the Audit and Compliance Committee of the Alphabet Board of Directors.
“The warrant underlying this agreement was sought in connection with a significant criminal investigation,” said U.S. Attorney Stephanie Hinds for the Northern District of California. “This agreement will help to ensure that, moving forward, Google will maintain the technical capability and resources necessary to comply with lawful warrants and orders, such as the one at issue in this case, that are critical to federal criminal investigations.”
