Alphabet, the parent company for Google, published this week a report on the second quarter of 2022. The financial results of IT Corporation have been largely encouraging, but can be seen as an alarming sign for other social network giants such as Meta* Platforms, which owns Facebook*, Instagram* and WhatsApp.
Quarter sales of advertising at the world's largest video hostel have grown at the slowest rate since Alphabet first published YouTube statistics in 2018. This means that the previously published catastrophic Snap Inc report reflects not only the problems of one company, but also shows what other social media giants, such as Meta*, may face. Mark Zuckerberg's quarterly report is due later this week.
TikTok competition, last year's high performance, and economic instability all played a part in YouTube's recent failures. The platform's results were also influenced by the worsening of the situation in Ukraine and the change in confidentiality policy on Apple devices. Each of these factors influenced video hosting results in the second quarter. If YouTube's growth slowdown lasts too long, it could have a negative impact on the value of Alphabet shares.
In the second quarter, YouTube's advertising revenues increased by 4.8 per cent, a percentage point lower than the first quarter's, indicating that YouTube advertising sales are more vulnerable to poor economic conditions than Google's. In the reporting period, YouTube advertising sold $7.3 billion, which is less than projected by analysts at $7.5 billion. Alphabet's main source of income remains the online commercial in Google's search engine, whose sales increased by 13.5 per cent to $40.7 billion in the second quarter. This is because YouTube is more competitive with other media platforms such as Snap, Twitter, Facebook*, Instagram* and others.
Analysts believe that the growth of YouTube advertising revenues is also hampered by competition with TikTok. In their view, the short video service poses a threat to the further growth of Meta advertising revenues.
* Listed on the list of voluntary associations and religious organizations in respect of which the court has taken a legally enforceable decision to abolish or prohibit activities on the grounds provided for in Federal Act No. 114-FZ of 25 July 2002 on countering extremist activities.