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Google’s record-breaking fine isn’t hurting the company very much

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Google is facing a massive fine but its business is doing just fine.
Google is facing a massive fine but its business is doing just fine.

Image: Getty Images/justin sullivan

For a company that was just hit with staggering $5 billion fine, Google and parent company Alphabet are as unbothered as ever. 

Alphabet reported its second quarter earnings Monday, just days after the European Commission announced a record-setting $5 billion fine against Google for Android antitrust violations. Though the company’s quarterly profits ultimately took a hit due to the fine, it still delivered better than expected results.

The company reported earnings of $11.75 per share, beating analysts’ estimate of $9.66, according to The Wall Street Journal. With the massive EU fine factored in, Alphabet’s per share profit declined to just $4.54.

But Wall Street wasn’t bothered by the loss: The company’s stock soared more than 5 percent to a record high in after-hours trading following its earnings report. 

The reason for the surge was better than expected profits in Google’s ad business, which continues to dominate. 

Meanwhile, on its quarterly earnings call, Google execs remained upbeat, despite the historic fine. CEO Sundar Pichai reiterated that the company plans to appeal the decision. At the heart of the EU complaint is Google’s reliance on bundling its own software into Android, which Europe’s regulators say gives the company an unfair advantage.

“I think overall it [Android] has created more choice for everyone, not less,” Pichai said during the call, when asked about the EU decision. “We’ll appeal the commission’s decision… but we are also looking forward to finding a solution above all that preserves the enormous benefits to Android users. I’m confident that we can find a way to make sure that Android is available at scale to users everywhere.”

Even if Google’s unsuccessful in fighting the fine, $5 billion is hardly a major setback for the company, which reported total revenue of $32.7 billion this quarter alone. If, however, the ruling results in a major change to how Google implements its software — namely, search — in devices in Europe, that could have a negative impact on the company’s bottom line.

But if those concerns are weighing on investors, you wouldn’t know it from the market: Alphabet stock looks to be on track to open a record high Tuesday.

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