Google Cloud growth slows, losses grow, bosses unworried Google’s cloud continues to lose money, but the ad giant and its parent company Alphabet aren’t troubled by the $858 million in cloudy red ink produced in its second quarter for financial year 2022. Alphabet reported overall Q2 [PDF] revenue of $69.7 billion, $40 billion of which came from Google Search and related activities …
That loss is against their cloud business, which had a total of $6.4 billion in revenue. The losses increased by about the same amount as revenue increased.
So yes, I think they should fret. Once again Google makes over 100% of their profit shoving ads in people's faces, and all other lines of business combined lose money. They would be better off if they just did ads and products that support delivering ads (Search, Gmail, Android, etc.) and closed down every other business.
Not a chance of any fretting... Search / advertising is dominant in the market and making plenty of money. Cloud is relatively recent for Google and they want to grab market share. Then they can turn the screws. Gotta speculate to accumulate...
Given AWS already has over 30% of the market and that Azure (> 20%) is going to be the default option for most of the Microsoft shops, I suspect it's going to be difficult for Google to offer a distinct proposition.
And while Google build an awful lot of data centres, I just get the feeling they're really still primarily concentrated on their own needs whereas AWS and Azure are now more focused on external customers.
But that's the age-old problem with Google: they do stuff because they can without pausing to consider why they should.
Google cloud is not a me too.
What these figures do not indicate is that Google's biggest cloud customer by far is Google itself.
Google is not about to host on AWS. They need that cloud, the write k8s for their own benefit and 6.x billion in revenue is all good money and what they themselves call "eating your own dog food".
With Google its not so much a long play as a big part of who they are. A few external customers just keeps them on their toes with things like Spectre and realising security in depth. That alone is probably worth 900 million to them.
At least 2 major banks in Australia have now relegated AWS to secondary cloud service, brought about by AWS' arrogance, pricing, and especially their proserve people.
One bank elevated Azure - the other went full-hog for GCP. At "current bank" you have to justify using AWS, with GCP the default.
Arguably anecdotal, if you can call 2 of the big 4 "anecdotal".
Nobody can make over 100% of their profit doing anything. "Taxable" profit sure, that's a moveable feast for the lawyers and accountants to pick over, like seagulls following a trawler or sharks swarming over spilled chum, but "profit" is a thing - you can't have more than 100% of it no matter how big or small it is, except in comparison to something else.
Soz Pascal, though Ballmer fucked up a few times, sadly, profits did increase during his tenure. And now I am stuck seeing that bloody "developers" video in my head.
Pity he wasn't in charge at Google. With a bit of luck he might have fucked up their tracking and advertising business.
Google aggressively monitors everything you do until you're trying to report criminal uses of GCP, then it's all bots and forms and can't process your complaint.
The amount of Google IP address space in various blocklists would alarm anyone out shopping for hosting. Google is probably single handedly responsible for all the blocklists adding IPv6 support.
Are you happy that a loss making service will still be there in the long term? Any big business may axe an unprofitable line at any time (as has been seen with many cloudy services already).
The big problem for the customer is that extricating itself from the 'cloud' can be much harder than getting into it.
It's loss making because it builds new datacenters to accommodate for future growth. There's nothing wrong with that unless you're a short term Wall Street investor that would like to squeeze profits out of everything. But because Google doesn't give dividend, the only thing that matters to investors is growth.
You might want to look at the first 20 years of Amazon and the first 10 years of YouTube to see that companies are often very happy to live with losses as long as revenues continue to grow. The numbers are also comparable to Amazon and Microsoft.
I'm not a fan of clouds but Google's offering does make it interesting for some specific tasks where number crunching is key.
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