By Clare Duffy, CNN Business

Google may be the giant in the digital advertising world, but even it is not immune to the impact that the economic downturn and recession fears are having on the online ad market.

Google parent company Alphabet (GOOGL) on Tuesday reported earnings results for the third quarter that fell short of Wall Street analysts’ estimates for both sales and profits, due in large part to a sharp slowdown in the growth of its core advertising business.

It reported revenue of nearly $69.1 billion, up just 6% from the same period in the prior year.

Google’s advertising revenues grew just 2.5% year-over-year, compared to the 43% growth it posted a year ago. YouTube’s ad business, which competes with TikTok, was especially hard hit, with revenue declining nearly 2% from the year-ago quarter.

Google’s net income, meanwhile, came in at $13.9 billion, down more than 26% from the year prior and well below the $16.6 billion analysts had projected.

The company’s shares fell nearly 6% in after-hours trading Tuesday following the report.

The details

Sundar Pichai, CEO of Alphabet and Google, nodded to the tougher economic climate in a statement included with the results.  (Editor’s Note: Pichai led an earnings call via YouTube, which Alphabet owns, at 5 P.M. ET on Tuesday.)

“We’re sharpening our focus on a clear set of product and business priorities,” Pichai said. “We are focused on both investing responsibly for the long term and being responsive to the economic environment.”

In September, Pichai defended the company’s decision to cut back on certain aspects of its operations, announced earlier this year.

Google CEO defends cost-cutting measures even as workers express concerns

Tech companies, including Google, reported that they’d started to feel the impact of declining online ad spending in the prior quarter. High inflation, looming recession fears and the ongoing war in Ukraine have all continued to weigh on the industry.

Growth in other areas of Google’s business also appear to be slowing.

Google Cloud revenues grew 37% year-over year, a deceleration from the nearly 45% growth it posted in the year-ago quarter, and the segment’s net loss increased to $699 million from $644 million during the same quarter last year.  (Editor’s Note: Google’s Durham engineering hub employs many engineers and other workers who work in this line of business.)

“Google delivered a disappointing quarter with the search giant underperforming our expectations across almost all business units, most importantly its core ad search segment,” said Senior Analyst Jesse Cohen.

Google released a set of new products earlier this month.


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