Microsoft’s search business revenue drops, which is bad news for Google

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According to reports, Microsoft expects its search advertising revenue growth will continue to decline, and for Google’s parent company Alphabet, which is about to release its earnings on Thursday, this may also be bad news.

Microsoft’s first-quarter financial report released on Tuesday showed that the company’s performance last quarter exceeded expectations, but its search advertising revenue fell 10% year-on-year, and said it expects search advertising revenue to continue to decline in the next quarter. Microsoft Chief Financial Officer Amy Hood (Amy Hood) said in a conference call with investors that for the quarter ending in December this year, “in the search field that does not include TAC, we expect revenue to be in the mid to high single position. Continue to decline within the scope of the number.” This means that the decline in its search advertising business will reach 7% to 9%.

Compared with Microsoft’s Bing search, Google’s search engine is more widely used and has more users, but in terms of search advertising revenue, Google and Microsoft have shown very similar trends.

In the last quarter, Microsoft’s search advertising revenue fell by 18% after excluding traffic acquisition costs due to customer spending on advertisers. In the same quarter, Alphabet also announced its first ever quarterly revenue decline.

Specifically, in the second quarter of this year, Google’s revenue from search and other live advertising (excluding YouTube) fell by approximately 10% from the same period last year, from 23.64 billion US dollars to 21.32 billion US dollars. And YouTube, which started to release its performance independently this year, has grown its advertising revenue from US$3.6 billion to US$3.81 billion.

Before that, in the quarter ended March 31, after excluding the cost of traffic acquisition, Microsoft’s search advertising revenue increased by 1%, which coincided with the beginning of the epidemic. In the quarter, Alphabet’s revenue from search and other channels (excluding YouTube) increased by 9%, from US$22.54 billion in the same period in 2019 to US$24.5 billion.

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