Alphabet earns record profit on Google ad surge

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Alphabet's chief financial officer, Ruth Porat, reported "modest impact" on YouTube ad sales from Apple's efforts. But analysts said Google overall was less affected than peers because its search engine collects data on user interests that is valuable to advertisers and is unmatched in the industry.

"They are almost completely immune to Apple's changes," said Collin Colburn, an analyst at tech consultancy Forrester.

Other companies also faced slowdowns because advertisers cut spending as they struggled to staff up and keep shelves stocked amid hiring and supply-chain issues brought on by the pandemic. Schindler said supply-chain challenges affected only Google's sales of automotive ads.

Google Cloud, which trails Amazon.com Inc and Microsoft Corp in cloud services market share, increased revenue by 45% to $4.99 billion, slightly below estimates of $5.2 billion.

Alphabet's total costs increased 26% to $44.1 billion in the third quarter and the company's workforce size passed 150,000 employees.

Alphabet shares have outperformed those of many big peers since the end of last year, rising about 57%. Microsoft is up 39%, Facebook 20% and Amazon 2% over the same period.

But shares of Alphabet trade at a slight discount to Facebook, the internet's No. 2 seller of online ads. Facebook trades at 6.8 times expected revenue over the next 12 months compared with 6.4 times for Alphabet.

Facebook has been swamped with accusations in recent weeks from a former employee who leaked thousands of confidential company files to media and filed complaints with the U.S. securities regulator over alleged misrepresentations by the company about its risks from hosting inappropriate content.

Google has been caught up in some of the fallout. A YouTube policy official testified to U.S. Congress earlier on Tuesday alongside other companies about the harms of social media to young users.

Investors also await further changes to Google's businesses as a result of regulatory scrutiny. U.S. and other authorities have alleged some of the company's practices in advertising and search are anticompetitive, though the company argues they are to benefit users. In one concession to critics last week, Google said it would cut some of the fees it collects from apps on its Play app store starting next year.

But the move could end up generating new revenue for Google if it leads companies such as music streamer Spotify Technology SA to start selling subscriptions through their apps and giving Google 10% to 15% of the sum.

Alphabet's Porat said on Tuesday that earlier trims to Play fees would cut in to sales.