Google owner Alphabet misses sales forecasts

Google's parent company, Alphabet, saw its shares drop in after-hours trading after the internet giant missed revenue forecasts.

Alphabet, which also owns YouTube, reported $36.3bn (£28bn) in sales for the first quarter, below expectations of $37.33bn.

Profits also fell during the three months to 31 March.

It was impacted by a fine from the European Commission for blocking rival online search advertisers.

Google had to pay €1.5bn (£1.3bn) after it was accused of abusing its market dominance by restricting third-party competitors from displaying search adverts between 2006 and 2016.

Including the fine, Alphabet's operating profit dropped to $6.6bn from a previous $7.6bn.

Sales growth slowed to 17% in the first three months of the year, below the expansion rate of the previous three months and down from a 26% increase in the same period last year.

Alphabet's share price dropped nearly 7% in after-hours trading.

Ad fears

Alphabet also said that the rate of growth in "paid clicks" decelerated, slowing to 39% growth compared to 59% at the beginning of 2018.

Under the model, companies pay a fee each time one of their adverts is clicked on.

Alphabet chief financial officer Ruth Porat said the firm was experimenting with its ad products as users grow reliant on mobile devices and that it was seeing revenue volatility as a result.

The majority of the firm's revenues (84.5%) came from Google's ad business, which sells links, banners and commercials across its own websites and apps and those of partners.

Google's three billion users help make it the world's largest seller of internet ads, according to market research firm EMarketer.

George Salmon, equity analyst at Hargreaves Lansdown, said: "Another EU fine won't have washed well with investors, but in reality it's not the cheque on its way to Brussels that's causing the shares to drop.

"Instead, it's a nasty combination of growth in traffic to Google ads slowing and lower revenue per click from those ads that's upset the market."