Google’s parent company Alphabet Inc’s revenue hit its lowest in almost seven years wiping $70bn ($AU99bn) off its market value, sparking fear for Google as advertisers shift digital spend to rivals.
The stock fell as much as 7.5 percent on Tuesday in New York, a day after the company reported its slowest quarterly revenue growth in three years.
Roughly 85 percent of the company’s revenue comes from Google’s ad business.
The results follow growing fear for Google as advertisers start to move their ad spend from platforms where people search for products, to places like Amazon, where people are actually making the purchase. Such a move helps advertisers get closer to the moment of transaction.
Historically, Google is the first place consumers go when searching for a product, which is what has allowed the search engine to charge premium prices to retailers and advertisers wanting to reach customers online.
However, consumers have been steadily turning to other search giants like Amazon.com, with the e-commerce platform taking a large share of the global ad market, invariably reducing Google’s share.
Amazon’s digital advertising franchise is now the third largest in the U.S., just behind Google and Facebook, according to EMarketer estimates.
The online retailer revealed its first-quarter sales in Amazon’s “other” segment last week, which is predominantly advertising, increased 34 percent to $2.72 billion ($AU3.8bn), which is still less than one-tenth of Google’s ad sales of US$36.3 billion ($AU51.9bn).