Shulou(Shulou.com)11/24 Report--

CTOnews.com, April 27 (Xinhua)-- Google Cloud Business (Google Cloud) is a division of Google's parent company Alphabet, which provides cloud computing, data analysis, machine learning and other services. Google's cloud business has been losing money since its launch in 2008 and did not turn a profit for the first time until the first quarter of this year.

According to Alphabet's results, Google's cloud business had revenue of $7.4 billion and operating profit of $191 million for the quarter ended March 31 (CTOnews.com Note: currently about 1.324 billion yuan), with a profit margin of 2.5%. Although this is a historic breakthrough, Google's cloud business still looks weak compared to its competitors. Amazon's AWS (Amazon Web Services) had revenue of $80 billion in 2022 and an operating profit of $22.8 billion, with a profit margin of 28%. Microsoft's Azure is also growing, with no specific figures, but its market share is estimated to be more than twice that of Google's cloud business.

Why has Google's cloud business been losing money? The main reason is that it has invested a lot of money to expand infrastructure, develop new products, and recruit new customers and talent. Over the past three years, Google's cloud business has lost a cumulative $14.6 billion. Alphabet's CEO Sundar Pichai doesn't care about the losses, arguing that they are necessary investments for future growth, and that Google itself has enough profits to support them. He expressed satisfaction with the profit and said Google's cloud business had become one of the largest enterprise software companies in the world.

Whether Google's cloud business can narrow the gap with the leader in the future depends on whether it can continue to be innovative and competitive. Currently, Google's cloud business is developing new technologies, such as generative artificial intelligence (generative AI), to improve the quality and efficiency of its search services. Pichai says he doesn't think these technologies will add much to infrastructure costs and will provide users with more choices.

At the same time, Google's cloud business is also facing some challenges and pressures. First of all, the changes in the market environment, due to the COVID-19 epidemic and chip shortage and other factors, resulting in a decline in demand and income of the entire industry. Alphabet's total revenue rose only 3% to $69.8 billion in the quarter. Second, there is the issue of cost control, with Alphabet shouldering $2.6 billion in expenses for the quarter, including layoffs and cancellation of spare office space. These expenses have led to a decline in operating income, profits and profit margins. Finally, there is the question of strategic adjustment. Ruth Porat, Alphabet's chief financial officer, says the company is committed to long-term growth and to creating investment space for the most promising areas by optimizing its cost structure. This means that Google's cloud business may face more internal competition and censorship, rather than unlimited support and support.

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