The crypto winter is hurting Google’s ad empire
A price crash in cryptocurrency and the start of a new so-called “crypto winter” has led to many companies in the industry facing a liquidity crisis.
Artur Widak | Nurphoto | Getty Images
Not even Google is immune to the crypto winter.
In Alphabet’s third-quarter earnings call on Tuesday, Philipp Schindler, Google’s chief business officer, blamed a slowdown in revenue growth in part on reduced ad spending by crypto companies and other financial firms.
“In the third quarter, we saw a decline in spending by some advertisers in certain areas of search,” Schindler said. “For example, in financial services, we saw a pullback in the insurance, loans, mortgages and crypto subcategories.”
Google’s overall ad growth of 6% in the quarter was the weakest for any period since 2013, except for one quarter at the start of the pandemic. YouTube ad revenue shrank from the previous year. CEO Sundar Pichai said the “challenging macro climate” is having an impact on Google’s ad business.
Schindler referred to the crypto withdrawal twice, but he did not provide additional color or specifics. The cryptocurrency industry has been hit hard in 2022, as investors have fled risky assets and sold out of digital coins and the related stocks that they have bid up over the past couple of years.
Bitcoin and ethereum have both lost close to 60% of their value this year. Crypto exchange Coin base, which went public in 2021, is down over 70%. Meanwhile, the industry has been plagued by bankruptcies as hedge funds and lenders saw their liquidity dry up and, in some cases, were forced to default on debt. Celsius Network, Voyager Digital and Three Arrows Capital are some of the more notable names forced out of business.
Elsewhere, companies have downsized. Blockchain.com laid off 25% of its staff in July, Coinbase cut 18% of its workforce last month, and Crytpo.com has completed two rounds of layoffs this year.
For Google, it is hoped that the crypto sale represents only a short-term blip, as the company sees clear opportunities for growth in the future. Earlier this month, Google said it will rely on Coinbase to begin allowing customers to pay for cloud services with cryptocurrencies in 2023. In addition, Coinbase will move data-related applications to Google’s cloud infrastructure from Amazon Web Services, which the company has relied on for years.
— CNBC’s Jennifer Elias and Jordan Novet contributed to this report.
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