Alphabet Inc., the parent company of search giant Google, has reported a lower than expected 17 percent rise in its 2019 Q1 revenue disclosure.
Markets reacted negatively to the company’s slowest growth period in three years, with shares tanking 8 percent on April 30, 2019. Google attributed slowing revenue growth to a 19 percent drop in advertising sales and paid clicks.
Meanwhile, blockchain-based competitors in the advertising space such as Brave are vying for the company’s browser and search market share.
User Data and Privacy Concerns Impacting Revenue
Alphabet witnessed a $70 billion erosion in market capitalization after it published its first-quarter results. The technology giant also had to pay a $1.7 billion fine to European authorities in the same period.
EU authorities had penalized Google for breaches of user data and privacy. The Pay Per Click (PPC) and social PPC models used by technology companies have been the preferred advertising options. In a PPC model, the advertiser pays search engines only when they successfully direct users to their website.
Hargreaves Lansdown analyst George Salmon commented that slow growth and lower revenue from advertising was having a major impact on company finances. While Alphabet reported a better than expected Earnings Per Share (EPS), this figure did not factor in the penalty paid to the European Union.
It was rumored that Google had been tracking the activity and search history of its users. In September 2018, Professor Matthew Green reportedthat Google Chrome started syncing browser data to users’ Google accounts without their consent. The move was likely motivated by its potential to improve data mining algorithms, place personalized advertisements, and display improvised recommendations.
Higher user engagement with advertisements would translate into higher earnings and revenue for the search giant. More than 59,000 data breach incidents have been reported since the GDPR laws came into effect across the EU.
Brave: A Privacy Focused Browser
While Google struggles to maintain a foothold in the advertising space, competitors such as Brave are challenging its long-standing dominance. Brave’s browser gives users the option to block traditional advertisements and ad trackers. The browser has gained popularity for prioritizing user data, security, and privacy over revenue and profits.
Brave’s business model revolves around the BAT digital currency that rewards users that engage with the company’s whitelisted advertisements. Since March 2019, Brave began distributing BAT tokens to users as part of its larger program to financially support quality content and share advertising revenue with users.
Given that data is considered to be the new oil, technology companies have compromised user data in their greed for higher revenues. Blockchain technology and cryptocurrency could help bring order and accountability to an industry which has long been guilty of compromising user privacy.
Do you think Brave browser will be able to command a significant market share in the future and even challenge Chrome’s dominance? Let us know your thoughts in the comments below.
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