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Alphabet's Looming Business Model Reboot

Alphabet Inc. (NASDAQ:GOOG) (GOOGL) may appear to be a diverse business, but more than 90% of the company’s billions of dollars in revenue comes from selling advertising space, primarily via their Google search engine. Alphabet attracts a huge number of advertisers willing to bid for premium advertising space, and commands more than 75% share of the global search market.

Yes, I ‘googled’ the above statistics on the web.

Alphabet dominates the search engine market, but the times are changing in subtle ways. While the company is still putting up large and increasing numbers (revenues and profits), my gut feeling is that we are getting close to ‘peak internet advertising’. The mobile revolution, ad blockers, and virtual digital assistants are creating headwinds that will be of concern for Alphabet’s future.

Mobile Revolution

As every investor who hasn’t been asleep for the last half a dozen years can attest, the number of mobile devices in use have grown exponentially, while PC and laptop internet use has stagnated.

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by Steve Auger