back to article Google's cloud services lost $14.6bn over three years – and CEO Sundar Pichai likes that trajectory

Google’s various cloud services bled $14.6bn in losses in the past three years while also growing revenue to new heights. News of the losses emerged on Tuesday when Google’s parent company Alphabet published its Q4 and full-year results [PDF] and, for the first time, reported financial performance for Google's cloud services, …

  1. Anonymous Coward
    Anonymous Coward

    Future headline

    Google parent Alphabet announced the shutdown of Google Cloud Platform, giving customers 2 weeks before all instances, K8S clusters and data stores are deleted.

    That's generally now they do it, isn't it?

    1. cipnt

      Re: Future headline

      I seriously doubt it. They can afford it. Look at how long they ran Youtube at a loss.

      Cloud is the backbone of everything they do, it's only natural that they offer it as a service too.

      They need to invest and keep prices down to gain market share.

    2. Gene Cash Silver badge

      Re: Future headline

      "Google just killed off its in-house games development teams working on Stadia titles, leaving outside developers to produces titles for the platform"

      Looks like that's about to happen for Stadia.

      Pikachu-shocked-face.

    3. Sanctimonious Prick
      Unhappy

      Re: Future headline

      I just go an e-mail from Google...

      "

      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.

      "

      So, Do No Evil turns into Fuck The World!

      I'm out of here!!!!!

  2. A Non e-mouse Silver badge
    WTF?

    Accounting Data

    I fail to understand accounting data.

    Increasing revenue whilst increase loss is good?

    Separately, you also spend $650 million on a project and loose $4.5 billion? WTF???

    Mind totally blown.

    1. rg287 Silver badge

      Re: Accounting Data

      I fail to understand accounting data.

      Increasing revenue whilst increase loss is good?

      Increased loss in absolute figures, but significantly reduced in percentage figures - from a 42% loss in 2018 to 30% in 2020.

      This is perhaps not surprising for something like GCP where economies of scale are everything and they're still some way behind AWS in their build out. Compare the GCP region map with AWS and GCP are far behind - no regions in Africa and somewhat behind in Europe and Asia. Lots of CapEx going on which is a reasonable place to make loss.

      The significant number for them will be whether they're making an operating profit on their built regions. If your regions are profitable, you can afford to incurs losses from investing in new regions.

      If your data centre makes £500k profit and you spend £1m building a new bit-barn to expand then on paper you'll have lost £500k that year, but it's not meaningful to claim you've lost money if you've just doubled your earning potential.

      It does point at a significant competition issue though that the hyperscalers are now so big that you need to be able to sustain >$15Bn in losses before you think about turning a profit. The barrier to entry is enormous.

    2. Cuddles Silver badge

      Re: Accounting Data

      "Separately, you also spend $650 million on a project and loose $4.5 billion? WTF???"

      No, they had revenue of $650 million on mulitple projects and lost $4.5 billion. That's how investment in new businesses work - spend money to set things up with the aim of making a profit in the future. Whatever the merits of the specific projects involved, I'm not sure how anyone could find that principle confusing; it's how pretty much every company that has ever existed started out.

    3. This post has been deleted by its author

    4. Justin Clements

      Re: Accounting Data

      The losses are ridiculous and they aren't supported by any meaningful financial analysis other than "we can afford the loss". Trying to rationalise the losses through "increased investment" is a wasted exercise. Losses like these with no end in sight is just theft of shareholder money.

      1. RegGuy1 Silver badge

        Re: Accounting Data

        Worth a listen

        Analysis: Chasing Unicorns

        In tech lingo, a unicorn is a rare start-up company valued at $1 billion dollars or more in private markets. Five years ago there were fewer than 50. Today there are over 400, including Airbnb, Uber and Deliveroo. Often created by eccentric founders and funded by evangelical venture capital backers with deep pockets, these companies have come to define our digital age while creating unimaginable riches for their investors.

        But with many enduring eye-watering losses even before the pandemic, and with big question marks hanging over their long term viability, is the magic dust finally coming off?

        https://www.bbc.co.uk/programmes/m000pfdq

  3. Dinanziame Silver badge

    Deep pockets

    Google has the third or fourth biggest cloud, behind Amazon, Microsoft and Alibaba, and they seem to be grabbing market share. They probably have all the required tech expertise already, though vision may be a different matter. But to get there, they apparently need to spend $5B a year... The barrier to enter the market seems really big.

  4. mark l 2 Silver badge

    It looks like the costs to make any money from cloud services is high and not many companies can afford $14bn losses before they make any profits. So the chances of new comers being able to take on the incumbents it very small.

    Of course Google strategy could well be to lock as many customers into Googles clould before ramping up the prices once they are hooked on the Google services. As although you could migrate from Google to Azure or AWS, its not an easy task once you are already setup on Google.

    1. needmorehare
      Devil

      In the IT world

      Choosing aaS means no homo. Nobody invests in a single cloud without the ability to "just switch" at a moments notice. You could say we're pretty promiscuous outside of board rooms.

      1. John Riddoch

        Re: In the IT world

        It's perfectly possible to get locked into a single cloud vendor stack if you don't plan to avoid it. Using, for example, Amazon RDS, Lambda, AWS ID services extensively and it's non-trivial to move to Google, MS or Oracle cloud without a lot of work. If all you're doing is apps on virtual servers & storage, it becomes much easier once you plan for the vagaries of each cloud platform.

  5. trevorde Silver badge

    Meanwhile at Apple...

    "What shall we do with this *huge* pile of cash? Hmmm, build a new cloud plat... OOOOH! SHINY!!"

    1. DS999 Silver badge

      Re: Meanwhile at Apple...

      Cloud platforms are something you sell to businesses, not consumers (other than a bit of storage) and Apple doesn't care much about selling services to businesses. No chance they sell cloud services on the open market beyond what they're doing offering iCloud storage. FWIW, iCloud is partially done on their own cloud but I believe mostly done with rented capacity from AWS and Microsoft.

      Given Google's big losses in that sphere, I guess I can see why Apple doesn't seem to want to fully insource iCloud storage - let someone else make the investments and worry about increasing capacity when needed.

      1. rg287 Silver badge

        Re: Meanwhile at Apple...

        FWIW, iCloud is partially done on their own cloud but I believe mostly done with rented capacity from AWS and Microsoft.

        Yes, for Apple's purposes where you're providing a higher level service - not selling compute or storage at a lower level, it makes sense to split it out. Run your baseload on your own DCs in the US and possibly Europe where you have high demand (i.e. a consistent and predictable load which means you should be able to DIY cheaper than buying at cloud prices). For the Rest of World, let someone else do the grunt work and scale as your break into those markets. Switch over core services to your own DCs once there's a customer base that justifies it. At their scale (not hyperscale, but still very significant) they can likely negotiate custom rates, further pushing out the point where it makes sense to DIY.

        1. DS999 Silver badge

          Re: Meanwhile at Apple...

          Well not only that, but Chinese law around data held for Chinese citizens is a rats nest they won't want to get involved in. Much easier to buy capacity from a Chinese cloud incumbent. Even if they eventually have their own cloud everywhere else, it would probably be too risky to do so in China.

  6. CrackedNoggin

    Google should not rely on current ad revenue as their sole source of profit - a bit of a one-legged stool.

    How about the business of "making" things? That goes for Amazon too.

    I saw an interesting article about an new Alibaba division which works with their supply companies to modernize and automate the supply companies production facilities. Advances in manufacturing will occur wherever manufacturing takes place, because that's where it needed, developed, and tested.

  7. Anonymous Coward
    Anonymous Coward

    So my idea for a cloud infrastructure startup won't get funded?

    All I need is $6B a year until it works out.

    That, my friends, is what you see when you go to the definition of "Barrier to Entry" in the dictionary.

    A picture of the Amazon smiley face.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2022