Google parent company Alphabet Inc (ticker: GOOG, GOOGL) is making big changes to two of its largest, most popular businesses. In response to criticism from both users and advertising customers, Google will be altering its YouTube advertising policies to give advertisers more control over where their ads are placed. In addition, Google has pledged to modify its famous search algorithm to help fight the proliferation of fake news websites.
Starting in March, more than 250 YouTube advertisers began boycotting YouTube in response to reports that ads were appearing on the platform alongside offensive or inappropriate content, including white supremacist videos. In 2016, more than 88 percent of Google's $89.7 billion in revenue came from advertising.
"We know advertisers don't want their ads next to content that doesn't align with their values," Google's chief business officer Philipp Schindler says in a blog post on March 21. "So starting today, we're taking a tougher stance on hateful, offensive and derogatory content."
In addition to cracking down on nefarious content, Google also pledged to allow advertisers to have more control over how and where their content appears.
Google announced this week it is also making changes to its search algorithm in an attempt to fight fake news sites that some Americans believe influenced the outcome of the 2016 presidential election. Google is now demoting misleading or false news sites in its search results with the help of a staff of more than 10,000 "raters."
"We were highlighting low-quality content in search results," Google vice president of engineering Ben Gomes says.
In addition to changes to how search results are ranked, Google will also be eliminating offensive and inappropriate phrases from its search bar's auto-complete function.
The changes to Google's advertising and search policies both came at the tail end of the first quarter and had little impact on the tech giant's performance. Investors will have to wait until the company's next quarterly earnings report to see if the changes will impact Alphabet's bottom line.
Alphabet reported a 22.2 percent increase in first-quarter revenue compared to a year ago. Alphabet's Q1 earnings per share of $7.73 and revenue of $24.7 billion both easily topped consensus Wall Street estimates, sending shares higher by more than 4 percent on Friday.
Wayne Duggan is a freelance investment strategy reporter with a focus on energy and emerging market stocks. He has a degree in brain and cognitive sciences from the Massachusetts Institute of Technology and specializes in the psychological challenges of investing. He is a senior financial market reporter for Benzinga and has contributed financial market analysis to Motley Fool, Seeking Alpha and InvestorPlace. He is also the author of the book "Beating Wall Street With Common Sense," which focuses on the practical strategies he has used to outperform the stock market. You can follow him on Twitter @DugganSense, check out his latest content at tradingcommonsense.com or email him at email@example.com.