Alphabet said Google’s traffic acquisition costs in the quarter increased 33 percent from a year earlier, to $ 6.45 billion. Last year, Bernstein Research estimated that Google would pay about $ 3 billion to Apple in 2017 to remain the default search option on Apple’s mobile devices.
Alphabet said it also incurred a $ 9.9 billion charge for the repatriation of foreign earnings following the recent changes in the tax code. As of September, Google held about 60 percent of its $ 100 billion in cash abroad. Many companies are paying a hefty tax bill as a result of bringing foreign earnings back to the United States.
Excluding the tax charge, Alphabet said its earnings per share was $ 9.70, compared with Wall Street’s expectations for $ 9.98. Revenue grew 24 percent to $ 32.32 billion.
The results underscored the strength of Google’s position in digital advertising, a market it dominates with Facebook. In the fourth quarter, users clicked on 48 percent more ads on Google sites — including search and YouTube — than a year earlier.
In 2017, two-thirds of every ad dollar spent on the internet went through Facebook’s and Google’s advertising systems, according to research from Goldman Sachs. What’s more, Goldman Sachs estimated that 87 percent of the additional spending in digital advertising this year will funnel through these two companies.
Even as Facebook made changes to what it shows users inside its News Feed, which it expected would reduce the amount of time users spend on the social network, the company reported on Wednesday a 47 percent increase in revenue in the fourth quarter from a year earlier.
Google is particularly well positioned with YouTube, despite concerns from marketers about their advertisements possibly appearing next to inappropriate or extremist content. Young people are spending more time on YouTube and shunning traditional television broadcasts. Google said more than 1.5 billion people come to YouTube every month to watch videos.
Alphabet also announced that John Hennessy, the former Stanford University president and a board member since 2004, had been appointed the company’s new chairman. Eric Schmidt stepped down as executive chairman in December. At the time, Alphabet had said it planned to appoint a nonexecutive chairman.