Chart of Alphabet

With data privacy issues front and centre for many technology companies at present, the outperformance to the upside has certainly been contained in recent weeks as investors weigh how serious this could be for future share price trajectories. Indeed, even technology behemoths like Facebook have been linked to the data privacy issues with the wider tech community potentially bracing for further revelations of the use of individual user data.

However, Alphabet, the parent company of Google, completely circumnavigated privacy data issues almost unscathed to produce a fantastic set of Q1 earnings with what I would call, in colloquial terms, a ‘back to basics’ approach for how the company generates revenue with profits up 73% thanks to advertising income. Over the same period, 82% of revenue came from ads, whilst the rest came from all other divisions, like Nest Labs unit (the home automation division that controls things like heating, security cameras, and door access points).

It will be a crucial time for Alphabet going forward as the EU’s new legislation, the GDPR – General Data Protection Regulation – comes into force shortly.  Importantly, this gives users more control over their data. Whilst a positive step for the consumers, this could hugely change how Alphabet targets users with ads from browser data and other online tracking activities.

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Jordan Hiscott


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