Key Takeaways
- Google chief business officer Philipp Schindler said he expects U.S. tariffs will weigh on the firm’s advertising business in 2025.
- E-commerce giants Temu and Shein have already dialed back their U.S. ad spending.
- However, Schindler suggested Google’s continued investment in AI will mitigate the impact.
During Alphabet’s quarterly earnings call on Thursday, April 24, Google’s chief business officer, Philipp Schindler, acknowledged that American tariff policy may cause headwinds for the company’s advertising business.
However, he sought to reassure investors that a focus on AI will continue to drive revenue growth.
Retailers Spending Less on Ads
Referring to Donald Trump’s move to abolish tariff exemptions for packages worth less than $800, Schindler said the policy “will obviously cause a slight headwind to our ads business in 2025, primarily from APAC (Asia Pacific)-based retailers.”
An analysis by Ars Technica revealed that Chinese e-commerce giants Temu and Shein have already dialed back their U.S. ad spending.
Meanwhile, the media intelligence firm MAGMA has downgraded its growth forecasts for the sector.
“The lack of visibility and risk of a trade war may cause marketing and advertising budgets to face freezes or cuts in industries that are most vulnerable to global trade,” a recent update noted.
Google Doubles Down on AI-Powered Advertising
With retailers cutting their ad budgets, Google is focused on using technology to deliver better outcomes for advertisers.
“More businesses, big and small, are adopting AI-powered campaigns. And the deployment of AI across our ads business is driving results for our customers and for our business,” Schindler stated.
He noted that in 2024, Google launched a range of AI features that help it deliver more relevant ads, and is now “seeing this work pay off.”
“We continue to solve advertisers’ pain points and find opportunities to help them create, distribute and measure more performant ads, infusing AI at every step,” he added.
No Slowdown in AI Investment
Despite concerns that investment in AI data centers is getting ahead of demand, Google shows no sign of slowing down.
In the first quarter of 2025, the firm’s capital expenditure climbed to $17.2 billion, a 43% increase compared to the same period last year.
The increase primarily reflected investment in “technical infrastructure,” with the largest expenditure going on servers and data centers, Alphabet CFO Anat Ashkenazi said.
James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
