Here’s Why Google Broke Out YouTube’s Ad Revs For The First Time Last Quarter

In February, when Google and YouTube‘s parent company, Alphabet, broke out earnings for its video giant for the first time in roughly 14 years, Alphabet CFO Ruth Porat said that the company was aiming to “provide further insight into our business and the opportunities ahead.”

But Reuters, citing filings released yesterday, reports that Alphabet may have also had other motivations in making the disclosure: namely, a request by U.S. regulators that it provide more “quantitative and qualitative” data about its businesses. The corporate finance division of the Securities And Exchange Commission (SEC) reportedly made the request of Alphabet last October.

“We note that YouTube, mobile search, and desktop search have experienced different growth and monetization rates, and enjoy different margins,” the SEC wrote in its letter to Alphabet, per Reuters. “As such, they represent significant subdivisions or components of Google properties revenues that should be discussed separately to allow investors to view the company through the eyes of management.”

And per Monday’s filing, Alphabet chief accounting officer Amie Thuener O’Toole responded late last year that Alphabet would comply by disclosing YouTube ad revenues — even though “there have been no significant changes to our advertising business.” Thuener O’Toole also wrote that Alphabet would disclose its Google Cloud revenues separately, but noted that the company didn’t feel it would be meaningful to separate mobile and desktop revenues given that it doesn’t sell ads by device type, per Reuters.

Google’s most recent earnings report, which dropped in February and shocked industry observers — many of whom have been guessing at YouTube’s inner workings for over a decade — disclosed the video giant’s annual ad earnings in 2017 ($8.15 billion), 2018 ($11.16 billion), and 2019 ($15.15 billion). Notably, YouTube shares 55% of these ad revenues with video creators.