Google Australia posts $2b local revenue with a further $7b flowing to broader Alphabet group

Tech giant Google reported $2 billion in Australian revenue in the year to December but the company’s advertising business went backwards in a subdued market.

That was up just 3 per cent on the prior year for the business ultimately owned by multitrillion-dollar Nasdaq-listed Alphabet.

But it only tells part of the story.

Google Australia largely acts as an agent for its international parent, taking a margin on sales.

The financials filed with the corporate regulator show a further $7.2b (up 13 per cent) of service fees were passed on to other companies in the broader Alphabet group.

That reflects ongoing debate about how much cash is generated at the point of sale against the value created in developing the intellectual property, largely overseas.

The tech industry broadly has been heavily scrutinised for the tax strategy behind these decisions, leading Google to pay more than $420 million in a 2019 settlement with the Australian Taxation Office.

Google Australia’s best performing unit was cloud services — the backbone of big data, machine-learning and artificial intelligence projects. Cloud revenue attributed to the local arm jumped 37 per cent to $329m.

Ad sales through products including YouTube, Search, Maps and Gmail dropped 7 per cent to $808m in what was a soft 2023 for advertising.

The company earned $319m profit in Australia — rising almost 17 per cent — and paid about $98m in tax, according to its annual filing with the Australian Securities and Investments Commission.

No dividends were paid to its parents.

Also this week, Facebook Australia reported just $209m of local revenue.

More than $1.3b was spent by advertisers with the local arm of the business, but the vast majority was passed on directly to the global business, controlled by US parent Meta.