During Alphabet’s third-quarter earnings call on Tuesday in the United States, Google Chief Commercial Officer Philipp Schindler blamed the slowdown in revenue growth in part on the cryptocurrency companies and other financial companies.
The company’s advertising spending decreased. It appears that even Google is not immune to the effects of the “crypto winter.” Schindler said: “In the third quarter, we did see some advertisers see a pullback in search spend in certain areas. For example, in financial services, we saw areas such as insurance, lending, mortgages, and cryptocurrencies search spend is down.”
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Google’s overall advertising revenue grew 6% in the third quarter, the slowest growth rate since 2013, excluding the first quarter of 2020, when the coronavirus outbreak began. Among them, YouTube advertising revenue did not increase but decreased, shrinking by 2% compared with the same period of the previous year.
Sundar Pichai, chief executive of Google and its parent company Alphabet, said a “challenging macro environment” was negatively impacting Google’s advertising business.
Schindler mentioned cryptocurrencies twice, but he did not provide any additional data or details. The cryptocurrency industry has been hit hard in 2022 as investors scrambled to flee the risky asset, dumping cryptocurrencies and related stocks that they had bid up in previous years.
Both Bitcoin and Ethereum have lost nearly 60% of their value this year, and shares of Coinbase, the cryptocurrency exchange that will go public in 2021, are down more than 70%.
At the same time, the cryptocurrency industry has also been plagued by bankruptcies as hedge funds and lenders dried up their liquidity and, in some cases, were forced to default on their debts. Celsius Network, Voyager Digital, and Three Arrow Capital are all well-known companies that have been forced into bankruptcy in the space.
Other companies in the cryptocurrency space are also downsizing. Blockchain.com laid off 25% of its workforce in July, Coinbase previously laid off 18%, and Crytpo.com has had two rounds of layoffs this year.
But in Google’s view, the cryptocurrency sell-off is only a short-term temporary phenomenon, and the company believes that there are still obvious growth opportunities in this field in the future.
Earlier this month, Google said it would start relying on Coinbase in 2023 to allow customers to pay for cloud computing services in cryptocurrencies. In addition, Coinbase will move data-related applications from Amazon’s AWS, which it has relied on for years, to Google’s cloud infrastructure.