Google Cloud lost $5.61 billion on $13.06 billion revenue last year

jureve

Google’s cloud business reported operating loss of $5.61 billion in 2020. It brought in $13.06 billion in revenue for the year.

It’s the first time the company revealed the operating income metric for its cloud business.

The unit’s losses appear to be growing as the company invests heavily in sales staff. The company said the cloud unit lost $4.65 billion on $8.92 billion in revenue in 2019, and lost $4.35 billion on $5.84 billion in revenue in 2018.

It lost $1.24 billion on revenue of $3.83 billion in Q4 2020.

Alphabet’s latest push to show it’s serious about its cloud unit comes as it tries to diversify revenue, which primarily comes from advertising, a business that showed vulnerability in 2020 — particularly in the second quarter. Google Cloud includes infrastructure and data analytics platforms, collaboration tools such as Google Docs and Sheets, and “other services for enterprise customers.”

Wall Street has been seeking additional financial details surrounding the company’s cloud business, which Google has pumped resources to grow while in a distant third place to heavyweights Microsoft and Amazon. Google began breaking out cloud revenue for the first time, one year ago.

The company’s past attempts to bolster its cloud unit under CEO Diane Greene, who left in 2018, failed to capture much market share. But, since former Oracle executive Thomas Kurian came to Google to lead its cloud efforts in 2019, the company has gone on hiring and acquisition sprees.

Source: Google Cloud lost $5.61 billion on $13.06 billion revenue last year

havoc

I guess they didn't know about the overselling trick

Mulder

Avery business has an operating loss, are you dumb?

seriesn

In the Big boys world, only Azure and AWS making money with clouds. From Do to google, everyone else are at negative and will continue to be for quite sometime. Marketing is expensive.

Mulder

@seriesn said: making money is not the same as operating loss or revenue. You should do the simple math

seriesn

@Mulder said:

@seriesn said: making money is not the same as operating loss or revenue. You should do the simple math

In the sense actually making profit? Yes.

Shell companies, VC fund, big salary? Those are a whole different story.

Freek

Trust that they don't kill another product is a big factor against Google right now imho. They keep killing products that have a reasonable user base, so yeah that will work against them.

havoc

@Freek said:
Trust that they don't kill another product is a big factor against Google right now imho. They keep killing products that have a reasonable user base, so yeah that will work against them.

Gotta keep your users on their toes with the element of surprise!

seenu

@seriesn said: From Do to google

DO still operating at losses? any sources?

chimichurri

@seriesn said:
In the Big boys world, only Azure and AWS making money with clouds. From Do to google, everyone else are at negative and will continue to be for quite sometime. Marketing is expensive.

I haven't seen their books but I'd bet Alicloud (Alibaba Cloud) is also profitable. (Also, they seem to be gaining on GCP too.. although I think their main customer base is just China+Chinese-influenced neighboring economies, whereas GCP is more or less used all around the world)

chimichurri

@seenu said:

@seriesn said: From Do to google

DO still operating at losses? any sources?

https://www.theregister.com/2020/01/21/digitalocean_layoffs_cloud/

In the discussion thread, Uretsky acknowledged that DigitalOcean, which was founded in 2011, isn't profitable at the moment.
"We are running at a modest loss now, which is OK because we are growing and also because whenever you launch a new product >or feature the up-front costs are much higher to get the initial product built and there is no revenue contribution from it until it's >launched and has ramped up," he wrote.

"But even so we did manage a completely net profitable year in our history in 2017, which I'm very proud of, and have been at a >slight loss in other years. We still have plenty of our Series B raise in our bank account."

Dewlance

They not only lose money but also killed many small hosting companies.

Rahul

Something tells me that, we as a group are part responsible for their loss as a result of our combined purchasing habit as a whole.

NoComment

Google, DO etc are losing money because they have to build new infrastructure, new hardware etc etc. They aren't really unprofitable, just investing for more gains in the future.

vyas

OK Google

Find me 5.61 Billion dollars...

chimichurri

@bibi said:
Google, DO etc are losing money because they have to build new infrastructure, new hardware etc etc. They aren't really unprofitable, just investing for more gains in the future.

Well, AWS (the undisputed market leader in the segment) are doing the same, and yet they are profitable: https://www.cnbc.com/2020/10/29/amazon-cloud-revenue-jumps-29percent-in-line-with-expectations.html

NoComment

@chimichurri said:

@bibi said:
Google, DO etc are losing money because they have to build new infrastructure, new hardware etc etc. They aren't really unprofitable, just investing for more gains in the future.

Well, AWS (the undisputed market leader in the segment) are doing the same, and yet they are profitable: https://www.cnbc.com/2020/10/29/amazon-cloud-revenue-jumps-29percent-in-line-with-expectations.html

That's probably an apples to oranges comparison. Google cloud includes many other services like google docs, and there's no way to tell what other services are actually being run by google cloud. These google related services aim to lock you into the google infrastructure even if they make nearly nothing, and they are doing well with that.

Also, there is no way google isn't using some of the spare capacity in google cloud for their many other products which technically aren't part of google cloud.

chimichurri

@bibi said:
That's probably an apples to oranges comparison. Google cloud includes many other services like google docs,

Well, the article from the first post does compare them that way, so does Gartner and many others...
And fairly enough, those enterprisey SaaS at AWS and Microsoft Cloud (Office365+Azure)are probably complete opposites (side income / main money maker and vice versa), not sure about Google, but arguably, let's say you're talking about the enterprise-aimed Gsuite - even though while AWS does still not have a spreadsheet app AFAIK, they do have Gmail (Workmail), and other enterprise-oriented SaaS too, so does Microsoft, so comparing these giants is OK IMO fair game.
As for DO... well, it's totally apples to oranges! But it was you who lined them up with GCP ;>

and there's no way to tell what other services are actually being run by google cloud.

Sorry, what does that have to do with GCP being profitable or not? You mean those other business might not be as profitable?

These google related services aim to lock you into the google infrastructure even if they make nearly nothing, and they are doing well with that.

Doing well with that, being what exactly? The undisputed lock in being the Google search engine? That's not a part of GCP AFAIR...
Unless I'm misinterpreting your thoughts here, it's not just Google, every one of these major providers plays the vendor lock-in game. The deeper you get into them, the less flexible they become, the the differences widen and so do the risks that a potential migration elsewhere would be painless. (IaaS < CaaS < PaaS/FaaS])

Also, there is no way google isn't using some of the spare capacity in google cloud for their many other products which technically aren't part of google cloud.

And spare AWS capacity is well known for being used for Amazon.com, which is technically the same Amazon but not, just like Google Cloud is Google(Alphabet). Again, not sure what you're trying to say here...

NoComment

@chimichurri said: As for DO... well, it's totally apples to oranges! But it was you who lined them up with GCP ;>

I talked about them in the same sentence because I believe they are both taking calculated losses due to expansion, not that they are unprofitable.

@chimichurri said: Sorry, what does that have to do with GCP being profitable or not?

I meant to say it's difficult to find out exactly which of the google products are considered part of google cloud

@chimichurri said: Doing well with that, being what exactly? The undisputed lock in being the Google search engine?

It's not just the google search engine. Op mentioned "Google Cloud includes infrastructure and data analytics platforms". I'm assuming this data analytics largely has to do with seo (lock-in for search engine) and more importantly, google ads.

@chimichurri said: Again, not sure what you're trying to say here...

Actually, I'm unsure why you're so pessimistic about these cloud providers. It's an expensive industry to get into because of infrastructure costs, but over time they are bound to make money. Do you really think they aren't doing proper research before spending billions of dollars on expansions?

chimichurri

Thanks for the answers!

@bibi said:
I talked about them in the same sentence because I believe they are both taking calculated losses due to expansion, not that they are unprofitable.

Well that's probably two ways of looking at the one same thing...

I meant to say it's difficult to find out exactly which of the google products are considered part of google cloud

>

It's not just the google search engine. Op mentioned "Google Cloud includes infrastructure and data analytics platforms". I'm assuming this data analytics largely has to do with seo (lock-in for search engine) and more importantly, google ads.

OK, now I finally might know where the major misunderstanding stems from (and why it's hard to compare them this way).

"Google Cloud Platform is a part [4] of Google Cloud, which includes the Google Cloud Platform public cloud infrastructure, as well as Google Workspace (formerly G Suite[5]), enterprise versions of Android and Chrome OS, and application programming interfaces (APIs) for machine learning and enterprise mapping services. " (src: https://en.wikipedia.org/wiki/Google_Cloud_Platform )

I think by saying Google Cloud you might have been focused on this broader sense I guess, where as I mostly had in mind the narrow one whose services are linked above, in the parts after the quoted intro (GCP).

Actually, I'm unsure why you're so pessimistic about these cloud providers. It's an expensive industry to get into because of infrastructure costs, but over time they are bound to make money. Do you really think they aren't doing proper research before spending billions of dollars on expansions?

In general (DO, GCP) I'm pessimistic because, perhaps due to me being more a simple minded engineer and less a business savvy manager, I think that this is a risky move to be burning money all along (not just inside this industry but in general, I have the exact same thoughts about Uber, fracking companies and all others that are operating in a similar manner).

Also, for Google's cloud specifically, while they as the company might have their cash cow letting them keep their cloud platform up and going even were it to lose its current popularity, even though some products in their lineup shine, the platform as a whole, well, I don't see the distance between them and Azure/AWS shortened any time soon (my impression is that they are catching up at best, but the other two are constantly improving or new things, and thus GCP is left behind all the time).

Finally (again only GCP), it's because of the thing that @Freek mentioned - Google is a company infamous of killing its products. From a consumer point of view, the ones I can recall is Google Reader (which affected me personally lol), Wave and Orkut, and cloud-wise (in the narrower sense of public cloud [I|C|P|F|DB]aaS, excluding enterprise SaaS), apparently they are as bad, provided this guy isn't making things up: https://medium.com/@steve.yegge/dear-google-cloud-your-deprecation-policy-is-killing-you-ee7525dc05dc

NoComment

@chimichurri said: I think by saying Google Cloud you might have been focused on this broader sense I guess, where as I mostly had in mind the narrow one whose services are linked above

Yeah, I suspect the loss includes the losses incurred by the other products apart from GCP, so there's no way to tell how badly or how well GCP is really doing.

@chimichurri said: I have the exact same thoughts about Uber, fracking companies and all others that are operating in a similar manner

It seems like when the economy is doing well, the best way to make money is to capture market share at ALL costs and start thinking about earning money later. It doesn't help especially when there's tax benefits when they operate at a loss. I'm not sure how it would go for other types of industries, but I doubt building datacenters would ever lose them money in the long run.

deank

I am just waiting for Google to kill Stadia.

What a fucking flop that "console" has been.

NoComment

@deank said:
I am just waiting for Google to kill Stadia.

What a fucking flop that "console" has been.

Stadia still lives! I think they killed the project to develop exclusive stadia games though

deank

It's on life support is a more fitting way to put it.

And, yeah, they killed first party studios. I assume Stadia itself is the next on the chopping block.

gks

After being used AWS and Azure, Google cloud doesn't offer comprehensive User Interface, instead they make it very tough or stupid interface to calculate pricing or buy or release the resources.

The UI still feel like being developed by research people, not counting user experience.

lentro

@gks
This? https://console.cloud.google.com/home/dashboard

GCP works perfectly fine for me. Their material dashboard looks p good tbh.

lentro

@deank said: I assume Stadia itself is the next on the chopping block.

I really hope so too !

aRNoLD

@Dewlance said:
They not only lose money but also killed many small hosting companies.

perhaps that's why they kept losing money.

if they had not killed too many small companies, they may have some room for development and growth.

the 2nd mover, or the late mover, sometimes don't have late-mover advantages, on the contrary, esp. in the hi-tech industry, 1st mover most likely enjoys easy-to-obtain resources and relatively easy-to-sustain competitiveness.

lentro

@bibi said: Actually, I'm unsure why you're so pessimistic about these cloud providers. It's an expensive industry to get into because of infrastructure costs, but over time they are bound to make money. Do you really think they aren't doing proper research before spending billions of dollars on expansions?

Capex is spread over multiple years. The fact that they consistently lose money (on an accrued basis) is quite scary and shows them dumping money just for market share. I know people who are making like $300k+/year at Google and Oracle. They are really just burning money to maintain talent and try to get some more market share. It's like Yahoo buying Broadcast.com at an unreasonable price just to maintain their #1 search engine dominance back then.

In the LE market, hosts undercut the big three by 80% and profitably operate. Theoretically, Google Cloud could have an 80% profit margin (and a bit more), but obviously they are just burning money like a startup would.

Intelpentium0

Got an email that Google Play music is gonna retire..

We’ll soon delete all of your Google Play Music library and data

On February 24, 2021, we will delete all of your Google Play Music data. This includes your music library with any uploads, purchases and anything you've added from Google Play Music. After this date, there will be no way to recover it.

You can download your Google Play Music library and data with Google Takeout or transfer it to YouTube Music. As a reminder, with one click you can still transfer your music library, including uploads, playlists, and recommendations, to YouTube Music before February 24, 2021.

seriesn

@Intelpentium0 said:
Got an email that Google Play music is gonna retire..

We’ll soon delete all of your Google Play Music library and data

On February 24, 2021, we will delete all of your Google Play Music data. This includes your music library with any uploads, purchases and anything you've added from Google Play Music. After this date, there will be no way to recover it.

You can download your Google Play Music library and data with Google Takeout or transfer it to YouTube Music. As a reminder, with one click you can still transfer your music library, including uploads, playlists, and recommendations, to YouTube Music before February 24, 2021.

Makes sense. They need more people to move to YouTube red/music. I will get a mini heart attack if they close YouTube red though.