Google's latest quarterly earnings report arrived on Thursday evening, and it reveals as much about broader shifts in the tech sector as it does about Google's relative success. And that success is relative. In the first quarter of 2013, Google brought in $3.3 billion in profits, a 16 percent increase over the same quarter last year. Revenue grew by about twice as much — 31 percent, to be exact — to $14 billion which is an impressive number, but it still falls short of analysts' estimates. As such, Google's stock price dipped by half a percent following the news and is hovering around $770 in after hours trading.
More fascinating than those bottom line numbers, however, is the figure that shows how Google's reacting to the larger shift from desktop to mobile. As Google consolidates more and more market share with Android's expansion and gets better and better at selling mobile ads, investors are flocking to the GOOG and abandoning the once invincible Apple stock. "Over the last 12 months, Google's share price has climbed 26 percent," explains Claire Cain Miller at The New York Times, "while Apple's has fallen 36 percent as the company faces flat profits, slowing growth and growing competition from Google's Android phones." In other words, Google is eating Apple's lunch.
But there's another Silicon Valley company — it's not hard to guess whom — that's eating everybody's lunch. Heck, they're practically ransacking the cafeteria at this point. That company, of course, is Facebook. The social network is keeping its promise to become a mobile company and absolutely reinventing the online advertising business in doing so. The Facebook-led increase in advertising real estate, among other things, has actually driven the average price of online ads down. Year-over-year, the price per click for a Google ad has dropped 12 percent, and it's still falling, albeit a bit more slowly.
Google is doing a pretty good job of holding onto its intimidating market share, but Facebook appears to be prying its fingers open. In the fourth quarter of 2012, Facebook boosted its mobile ad sales by 40 percent. Even though Google still controls 55 percent of the total ad spending on mobile devices, Facebook still brings in more revenue for mobile ads at the moment, and analysts expect Facebook's mobile advertising revenue to "soar" this year. None of these figures takes into account the new Facebook phone, a hotly anticipated product that's getting strong reviews and stands to give Facebook even more leverage in mobile.
Meanwhile, Apple's sort of just hanging out, watching its stock price sink. "We look at Apple and say, 'Hey, where's the next round of growth coming from?'" an analyst from BGC Partners told The Times. "You look at Google and say, 'Hey, these are some pretty big markets they're chasing after.'" You look at Facebook and say, 'Hey, is Zuckerberg going to leave some cheese for the rest of us, when he's done feasting?
This article is from the archive of our partner The Wire.