Google-parent Alphabet was the first large platform business to issue earnings in the current round of quarterly calls, with the latest disclosure indicating the online ad giants core priorities. More tellingly, the subsequent line of questioning from equities analysts hints at what Wall Street really cares about, and, going by last weeks showing, ad tech is (seemingly) in the rearview mirror for both parties. 

Despite Google experiencing two Ls in its antitrust travails over the past 12 months, one of which involves the potential breakup of its DoubleClick empire, Wall Street analysts posed more questions about Alphabets growth outlook for its nascent cloud business in light of AI infrastructure demand than they did about ad tech. 

Overall, Alphabet reported strong results for the period, with total revenue rising 14% year over year to $96.4 billion. 

Central to this performance was Google Services, which generated $82.5 billion in revenue (up 12%), largely driven by Search ($54.2 billion) and YouTube ($9.8 billion), as well as its nascent subscriptions business ($11.22 billion). 

However, the Google Network business, which encompasses ads served on third-party sites and apps (such as AdSense and AdMob), stood out as a weak spot when compared to Alphabets overall performance, as its only business unit to report a revenue decline. 

Total Google Network advertising revenue was $7.4 billion during the period, representing a 1% year-over-year decline. This segment accounted for approximately 7.7% of Alphabets total revenue and about 9% of Google Services revenue, continuing its gradual decline as advertisers increasingly prioritize owned-and-operated properties, such as YouTube and Search. In contrast, Googles search and YouTube revenues increased by 12% and 13%, respectively, during the period, driven by demand for Shorts and CTV ads. 

The decline in Network revenues illustrates a shifting dynamic: advertisers are favoring platforms with richer AI-driven formats, more accurate targeting and better performance measurement capabilities areas where third-party network inventory often lags behind.

While not insignificant, Google Networks contribution is shrinking in relative terms, both in size and strategic focus. It is increasingly overshadowed by faster-growing, higher-margin businesses like Cloud, which posted a 32% year-on-year increase in revenues to hit $13.6 billion, and subscriptions, which collectively now account for more than $11 billion in quarterly revenue.

Overall, it demonstrates how Google Network is increasingly a legacy revenue stream, contributing less to growth and offering limited upside amid the companys pivot toward AI-powered first-party surfaces, subscriptions and Cloud solutions. While its Google Network revenues likely remain a stable but fading line on the income statement, some might take the latest results as a cue that, despite its public rhetoric, the online advertising giant may pose a faint-hearted resistance in the upcoming remainder of its ad tech antitrust case, which recommences in mid-September.

Perhaps it is this notion that has spurred Marketecture CEO, and ad tech veteran, Ari Paparo to buy Googles AdX, the ad exchange at the center of the Justice Departments antitrust case. Promising to address industry woes such as eliminating dynamic allocation, sharing log files and replacing account managers with AI  the latest GoFundMe count falls short of the reputed $1 million target. 

His real aim? He maintains that his goal is to highlight Googles dominance, but more realistically, it is likely a bid to promote his upcoming book, Yield: How Google Bought, Built, and Bullied Its Way to Advertising Dominance, due for publication next week.

  • 25% or less: the amount of respondents that claimed their firms uses AI for new code generation, per an Aperiam Ventures survey. 
  • $185,000: The potential annual salary of AWS software engineers, according to Amazon listings compiled by Business Insider.
  • $7.3 million: The amount raised in a seed round of funding by Vaudit, formerly BlokID. 
  • 5.6%: the amount of U.S. search engine traffic generated by LLMs, according to CMO Today. 

Agencies have been some of the largest users of AWS Clean rooms, and they are often bringing their own special machine learning sauce and custom models that have been fine-tuned for clients (especially in healthcare).

In his reflection on this months AWS Summit hosted in New York City, Daniel Salmon, an equities analyst specializing in ad tech at NewStreet Research, notes how agents and nova models dominated the messaging, with some of the largest users of AWS Clean rooms. Common use cases are targeting consumers that are new to the brand, as well as improving ROAS

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Google users are less likely to click on links when an AI summary appears in the results

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Index Exchange taps Trade Desk exec Marybeth McGaugh, plus 5 other industry vets 

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