Google has heavily invested in Google Cloud, and while the revenue growth has accelerated, its losses are piling up. For the first time on Wednesday, Google revealed its operating income/loss for its Google Cloud Platform in its quarterly earnings.
Google Cloud lost $5.6 billion in Google’s fiscal year 2020, which closed on December 31. The revenue, on the other hand, stands at $13 billion.
While this looks like a dire situation, since cloud computing should bring in returns, there is more than one way of looking at this. The losses are piling up from $4.3 billion in 2018 and $4.6 in 2019. However, revenue is also growing strongly.
Resources to expand Cloud
CEO Thomas Kurian leads Google’s Cloud unit. It includes all of its cloud infrastructure and platform services, in addition to Google Workspace (which used to be known as G Suite). That is exactly where Google is pouring in more resources.
Data centres are not cheap, and Google Cloud launched four new regions in 2020, with work starting on more.
These projects are at the top of Google’s to-do pile of tasks, as well as some acquisitions if antitrust/regulation probes do not block them.
Google wants to bring the Cloud to everyone
Alphabet CEO Sundar Pichai said during the earnings call that on Cloud, the company sees how early customers are in this shift. The company wants to invest to make it easy for all customers globally to access what is offered.
The CFO of Alphabet, Ruth Porat, noted that Workspace is seeing strong growth, especially among large enterprises. The enterprises are signing meaningful, long-term commitment agreements.
At present, Google’s core business is subsidizing its cloud expansion.