Google owner Alphabet hit by soaring costs

Alphabet, Google's parent company, undershot profit expectations due to the high costs of initiatives including the launch of the Pixel smartphone range.

The business reported fourth quarter revenues up 22% to $26.1bn (£20.8bn), which it put down to increased ad income across both mobile search and on YouTube.

But while profits also grew 8% to $5.3bn (£4.2bn), they were lower than forecast.

Capital expenditure, meanwhile, was up by 46%, as Alphabet poured resources into assets and products including Pixel, the Google Home smart speaker, and cloud computing operations.

This meant that units of the business other than Google itself made a loss of more than $1bn – though revenue was up year on year from $150m to $262m.

A spokesperson said: "Strength in mobile and YouTube continues to grow at a significant rate. We’ve only scratched the surface on these businesses."

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