With the emergence of ChatGPT, artificial intelligence has become the hot topic among big tech companies. Google, which has tried to be at the forefront of this segment, sees itself in need of vindicating itself. The CEO of Alphabet, Sundai Pichar, has taken advantage of the presentation of the results of the fourth quarter, somewhat lackluster, to ensure that the company is about to reveal “a leap” in the searches and other services of the group.
Alphabet closed the year 2022 with record revenues of 282,836 million dollars (about 259,000 million euros at the current exchange rate), 10% more than the previous year, as reported this Thursday. However, operating margins deteriorated and operating income fell 5% to $74.842 billion due to higher costs. Added to this was the loss in value of some investments and other non-operating losses. With all this, net profit fell 21% in the year as a whole, to 59,962 million dollars.
In the fourth quarter things were even worse. Profit fell 34%, to 13,624 million dollars, after billing grew less than 1%, to 76,048 million, penalized by the strength of the dollar. In addition, advertising revenue from Google and YouTube fell in the fourth quarter compared to the same period in 2021. The decline is 3.6%, up to 59,042 million. In the history of Google, it is only the second time that advertising billing has decreased and the first, in the second quarter of 2020, was due to the outbreak of the covid pandemic.
Partly to offset those lackluster results and partly in response to ChatGPT, Sundar Pichai, CEO of Alphabet and Google, said in the earnings release: “Our long-term investments in deep computing leave us extremely well-placed as we Artificial intelligence reaches a tipping point, and I’m excited about the AI-powered leaps we’re about to reveal in Search and beyond,” he said without initially revealing details.
In the conference with analysts, Pichai has reiterated the group’s commitment to artificial intelligence and has announced that it will facilitate access to its powerful LaMDA conversation tool and other services based on artificial intelligence. In addition, he has said that he will integrate these new models with the search engine.
ChatGPT, a Microsoft ally, is perceived as a threat to Google. If it improves and becomes more widespread, users may prefer to ask questions to chat or other similar services instead of trying to find links through the search engine. Under pressure, Pichai has said that Google will be brave, launch products even if they are not perfect, see the reactions and improve them.
Both Pichai and CFO Ruth Porat have referred to the “cost structure” review. Alphabet has announced 12,000 layoffs this year, the equivalent of 6% of the workforce. The figures published this Thursday show that the group created 33,734 jobs in 2022, which has added 71,000 in the last three years. It closed 2022 with 190,234 employees.
The Mountain View (California, United States) giant expects to incur employee severance payments and other related charges of $1.9 to $2.3 billion, most of which will be recognized in the accounts for the first quarter of 2023. In addition, it is taking steps to optimize its office space around the world, which will entail terminating and similar costs of approximately $500 million, also in the first quarter of this year.
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