Google parent Alphabet tops Apple as world's most valuable company

WHEN two American students on a mission 'to organise the world's information and make it universally accessible and useful' dreamed up a new-fangled internet search engine from their college dorm in 1998, they could hardly have known the monster they were creating.

Google parent group Alphabet is now the world's most valuable company. Picture: AP Photo/Jeff Chiu

Less than 20 years on, Google has become a household name and is even listed as a verb in the Oxford dictionary.

Now the brand has reached the pinnacle of success after knocking global tech giant Apple off its pedestal to become the world’s most valuable company.

The news comes after parent company Alphabet posted a fourth-quarter profit of $4.9 billion (£3.4bn), up from $4.7bn a year ago.

The firm revealed global revenues had risen 13 per cent to $75bn, while its tax rate fell to 17 per cent.

The announcement sent the group’s share price up as much as 9 per cent in after-hours trading on Monday night.

It means Alphabet’s market value stood at $555bn, compared with rival Apple’s $533bn.

Though Apple reported record profits in its own financial results last week, the firm predicted iPhone sales would decline for the first time ever in the next quarter.

Google reorganised itself under Alphabet last October, and this set of results is the first time the group has split itself out into two major divisions.

Google holds its lucrative businesses such as digital advertising sales, the search engine and YouTube.

The rest of Alphabet is made up of the group’s more experimental ventures, including driverless cars and internet balloon programmes.

Annual figures show Alphabet’s other enterprises, labelled Other Bets business, lost $3.6bn during the reporting period.

The firm’s finance chief, Ruth Porat, hailed the “vibrancy of the business” during the announcement, with video-sharing site YouTube and the widely used Google search engine named as the core of the company’s growth.

However, the continued rise of search engine and advertising revenue could be down to rival Apple, one analyst has argued, suggesting that as more mobile users move to its iOS platform over Google’s Android, Google actually benefits.

Richard Windsor, analyst for Edison Investment Research, said: “The greater usability of the iOS user experience when compared to that of Android means that an iOS device generates around double the traffic of an Android device at the same price point.

“Consequently, there is far more opportunity in iOS to target users with marketing, resulting in meaningfully higher revenues.

“Edison estimates that Google’s revenue per user on iOS is more than double that on Android. Consequently, when the user shifts from Android to iOS, Google benefits in the short term.”

Google is currently at the centre of a tax row in the UK after it agreed a deal to pay £130 million in back-taxes that stretch back to 2005.

The agreement has been seen by some as too lenient for the internet giant.

UK business secretary Sajid Javid said it “wasn’t a glorious moment”.

The company will also give evidence to the House of Commons home affairs committee on countering extremism on Tuesday alongside representatives of the social network Facebook.