Google’s parent company Alphabet resisted the end of 2020 to post better-than-expected earnings for the fourth quarter of the year. But the biggest story is that Alphabet broke Google Cloud sales for the first time, revealing an impressive $ 5.6 billion annual loss last year, but a nearly 50% jump in revenue (to $ 13 billion) compared to 2019. And Google Cloud maintained that growth until the fourth quarter, when the division generated $ 3.8 billion in sales. This represents a 46% increase over the fourth quarter of 2019.
These numbers are notable for a few reasons: Google Cloud is behind the competition, in particular Microsoft’s Azure platform and Amazon’s dominant Amazon Web Services, whose CEO has just been promoted to manage the entire Amazon now that the co- founder Jeff Bezos is stepping back to the role of executive chairman in a surprise announcement this afternoon. But the division’s fast-growing revenues, second only to the search giant’s top advertising business, suggest that Google may become a major player in the cloud and a fiercer competitor to Azure and AWS in the years to come.
The message is now clear: Cloud computing is the dominant business for these big tech titans, and executives who can excel in the cloud industry are stepping in to take over the reins of the entire business. Microsoft CEO Satya Nadella ran Azure before taking over from Steve Ballmer, and Google Cloud chief Thomas Kurian was one of Oracle’s top executives before replacing VMWare co-founder Diane Green, in the main Google Cloud role. These are the people who run the show in the most important divisions of the most important technology companies, until they are promoted to run the entire ship, apparently.
In many ways, Google’s cloud business is experiencing the same growth pains that its competitors have already experienced; AWS took almost 10 years to become profitable for the first time and is now an annual business of more than $ 45 billion. But Google is facing an uphill battle, which will take considerable time and financial investment to materialize.
Fortunately, Alphabet does not depend on Google’s cloud business, as Amazon relies on AWS to earn considerable profits each quarter, thanks to Google’s dominant advertising business, which generated an impressive $ 52.9 in revenue billion in the last quarter alone and almost $ 170 billion in the year.
Profit margins for Google’s services division are immense – Google earned over $ 19 billion in net revenue in the fourth quarter of 2020, up 41 percent from the fourth quarter of 2019. YouTube also continues to grow at a steady pace. The video site recorded more than $ 6.8 billion in revenue in the last quarter, an increase of 47% over the fourth quarter of 2019.
The ever-fluctuating Other Bets division – which includes Lab X from Alphabet, Waymo and other non-Google companies – raised $ 196 million in the last quarter and $ 657 million in the entire year 2020, but also posted operating losses US $ 4.48 billion in the year.