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Sundar Pichai, chief executive officer of Google Inc., speaks during the Google I/O Developers Conference in Mountain View, California, U.S., on Tuesday, May 8, 2018.
financial filings. CNBC reported in October that some advertisers were moving as much as half their search budget from Google to Amazon.
Meanwhile, Alphabet’s costs of doing business have gotten steeper.
Traffic acquisition costs — the fees Google pays to companies like Apple to be the default search engine — are projected to reach $7.62 billion this quarter, according to StreetAccount.
That’s an increase of 16 percent from the previous quarter and of 18 percent from the fourth quarter of 2017 — a significantly larger jump than the 2 percent to 3 percent changes that Google’s seen in TAC in recent periods.
TAC as a percent of advertising revenue is forecast at 23 percent, in line with previous quarters.
Net income for the fourth quarter is expected to dip from the previous quarter. FactSet consensus estimates put profit at $7.64 billion, down from $9.19 billion during the third quarter.
All of that on top of growing revenue suggests a slimmer margin.
Indeed, Alphabet is expected to post $38.9 billion in revenue for the fourth quarter, according to Refinitiv consensus estimates, an increase of 15 percent from the third quarter and 20 percent from the year-ago quarter. But quarterly operating margins are projected at 22 percent, according to StreetAccount, down from 24 percent and 25 percent from the previous quarter and the year-ago quarter, respectively.