Alphabet may need to crank up a spinoff machine. Google’s parent delivered another solid quarter on Thursday thanks to its ubiquity in search and digital advertising. Such success, though, may make outsiders wary of cooperating with its many side projects. Carving these out may be the answer – as Alphabet did with the maker of Pokemon GO. Google increasingly appears to be, along with Facebook, the big winner in digital advertising. The number of paid clicks rose 29 percent compared to the same period last year. Sure, much of this growth is occurring on mobile and sites like YouTube, where prices are lower than on traditional desktop search. But the overall effect is more dollars in Alphabet’s tills. Revenue rose 21 percent, and earnings rose 24 percent to $4.9 billion. Still, this can’t compare to the excitement generated by cross-Valley rival Facebook, whose revenue is growing more than twice as fast. Alphabet’s bigger size means it’s far harder for it to expand at the same pace. But perceptions matter when trying to lure investors, favorable press and talented engineers. Moreover, there have been few hits. That’s why the success of Niantic, which developed Pokemon GO, is so notable. The firm was part of Google until given its freedom in 2015. That allowed Niantic to raise outside funds – and partner with the owners of the rights to the Pokemon characters, including Nintendo, and produce the game. That was easier once independent: content producers can be wary of Alphabet’s relatively freewheeling approach to intellectual property, and the software giant doesn’t want to favor one developer of software in its app store over another. (BreakingViews)
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