Google’s shares dropped 6% on Wednesday, the equivalent of $22bn in value.
Google’s first quarter profits actually rose by 3% to $3.45bn (£2.05bn), but the markets are worried that it is falling behind on advertising and mobile revenues.
Profits and revenue (which grew to $15.4bn for the three-month period) were also behind analysts’ expectations.
Investors were spooked by a fall in cost-per-click (CPC) ad revenue, which fell 9%.
CPC revenue has been hit by the fact more people now access Google services through their phones, where CPC prices are lower.
Google’s massive loss on the $3bn sale of Motorola Mobility to Lenovo in January was also cause for concern. It had bought the smartphone company for a whopping $12.5bn two years before.
Google’s CEO Larry Page remained sunny in a statement, saying: “We completed another great quarter. Google’s revenue was $15.4 billion, up 19% year on year.”
He seemed relaxed about his company’s competitiveness in the smartphone market, too: “We got lots of product improvements done, especially on mobile. I’m also excited with progress on our emerging businesses.”
Fears about how the public might react to infringements on privacy, which came to light yesterday, may have also played a factor in investors’ concerns about Google.
Yesterday we told you that Google is now openly admitting in its terms and conditions that it is automatically reading all Gmail correspondence.
I wrote about how shocking it is that we are not more shocked by the systematic snooping – regardless of whether it is done digitally or by another human – that we have come to expect in today’s society.
It seems the search behemoth may have to increasingly turn to exploiting our privacy if it wants to pick up profits. But what does that mean for each of us, and should you care?
Only time will tell.