Google’s TAC, as a percentage of overall ad revenue, ticked up to 23% from 22% a year ago. Pichai and CFO Ruth Porat warned investors that the percentage will continue to rise for the foreseeable future, because mobile search has higher acquisition costs.
But higher TAC isn’t necessarily a bad thing for Google.
When Mozilla released a new Firefox browser last year, for instance, Google replaced Yahoo as its search provider, and it also wrested default search status from Bing for Apple’s Siri and Spotlight searches. Major search distribution deals drive up Google’s TAC rate, but they are also coups for the ad business.
There are important questions that Google still needs to address.
Pichai wouldn’t speculate on GDPR implications and the company’s policy solutions for the EU regulation.
“It’s super important to get it right,” he said. “It’s been a big change for a lot of our partners as well, so we’re working closely with partners and regulators, but it’s too early to tell.”
Pichai likewise wouldn’t comment on potential changes to the Android operating systems after the EU antitrust commission charged Google last week with infringing on other search services by pre-installing services like the Chrome browser and the Play Store on smartphones.
But despite these headwinds, the momentum of Google’s core ad business is powering growth.
And a healthy ad business helps Google continue to massively grow headcount, despite tough competition for talent. The company added more than 13,000 people in the past year, most of them engineers, Pichai said, pushing the total number of employees to 89,058.