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- Google announces Gangbuster revenue from the major alphabet, revenue that raises Wall Street expectations.
- It’s music to investor ears, but Chief Executive Officer Sundar Pichai has dismissed a recent Justice Department lawsuit over a revenue call.
- Analysts and investors are concerned about the potential impact of this case, specifically wondering whether the loss of Google’s exclusive deal with Apple is “code red.”
- Pichai sought to allay concerns that the case would be a distraction for Google in the 1990s for Microsoft.
- Visit the Business Insider home page for more stories.
Google Parent Alphabet has just kicked off some impressive third-quarter numbers, hitting Wall Street expectations and sending its stock seriously out of business hours.
But analysts and investors can’t avoid the shadow of the Justice Department lawsuit filed against Google last week. On the company’s earnings call, CEO Sundar Pichai tried to anticipate questions about the case, saying Google “confidently presents our case” to analysts and investors.
“Regarding the lawsuit from the Department of Justice, we believe that our products are generating significant consumer benefits and we will defend our case with confidence,” he said. “Our organization is focused on continuing our work to create a search product that people like and value.”
But analysts continue to question Google’s claim and association with Apple as the actual search provider on its devices – an annual settlement of more than $ 8 billion that is now in the shopping block.
“Is this really a ‘code red’ situation, or is it something we can handle?” Barclays analyst Ross Sandler was asked to mention Google’s internal codename because of the possibility of losing a lucrative deal.
“Most of our partners choose us because we are the best search provider,” Pichai replied. “Customers say we have the highest search quality, so there is an organic demand. And we believe in investing in our expertise on our platforms, so we are absolutely committed to making sure we can serve our customers everywhere and we are really focused on that.
Pichai was also asked if Google could find “common ground” with the Justice Department.
“Observation is not new to us, in a way it is not sectoral and it is not surprising,” he replied. “We engage constructively whenever possible and, as we have shown in recent cases… we are confident in the benefits we provide to our clients, we defend our case when there are comments or judgments, we will be flexible and adapt. Then we build it.
At another point, Pichai made a clear attempt to allay any concerns that the case could be a distraction for the organization.
When Microsoft fought its own case with the Justice Department in the 1990s, the distraction dampened the company’s ambitions and allowed rivals like Google to advance in areas like mobile.
“There is a lot going on in the legislative and regulatory sector, some of which when created will also create certainty and, in some cases, even clarity and opportunity,” he said. “So we have a framework to address it and we take a long-term perspective on it.
“But at the end of the day, what’s in our control is our ability to mercilessly focus on customers and build great products and that’s where most of our energy goes.”
On Apple’s revenue call late Thursday, CEO Tim Cook was also asked about a lucrative search deal with Google, which would bring Apple between $ 8 billion and $ 12 billion a year, analysts said. . The Apple boss underestimated the significance of the deal and the potential for immediate repercussions.
“I don’t know how the Justice Department suite will go, but I think it’s far from a conclusion on that.”
