Alphabet sales drop for first time on Google ad cutbacks in pandemic

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(Reuters) – Google parent Alphabet Inc’s (O:GOOGL) quarterly sales fell for the first time in its 16 years as a public company, but the decline was less than expected as many advertisers stuck with the most popular online search engine during the pandemic.

Shares of Alphabet rose 1.2% to $1,557.81 after it released second-quarter results. The stock had rebounded early Thursday to this year’s pre-pandemic high of about $1,525.

With its mostly free tools for web browsing, video watching and teleconferencing, Google unit has become a larger part of many consumers’ lives during the pandemic as lockdown orders force people to rely on the internet for work and entertainment.

But advertisers on Google have suffered mass layoffs and other cutbacks during the pandemic, and marketing budgets are often the first to get slashed especially by big clients like travel search engines, airlines and hotels.

Google’s ads business has long trended with the broader economy, and the U.S. economy contracted at its steepest pace since the Great Depression in the second quarter, the Commerce Department said on Thursday.

Google appeared to weather the slowdown better than before, as the pandemic has made the internet more attractive to advertisers than TV, radio and other avenues.