Google’s cloud business is growing apace.
In the latest earnings report for Alphabet — Google’s parent firm — the company’s cloud business hit $5.5B, up 45% YoY.
But the growth is not cheap. Alphabet lost $890m over the quarter while running the business.
While the losses are big…
… Alphabet can certainly afford them. Per CNBC, its core search ad business raked in sales of $61.2B in the same quarter.
And competing in the market is worth it. The cloud industry will be worth $400B by 2025, per Bloomberg. With a 6% market share, Google is still far behind Amazon Web Services (41%) and Microsoft Azure (20%).
Google is making progress, though: Its revenue for 2022 is projected to hit $26B, ~4.5x its 2018 total.
One major problem
Unlike Amazon, much of Google’s cloud data centers are connected. When one region goes down, it affects another and can lead to global outages.
Google Cloud — and its 40k employees — is under the leadership of Thomas Kurian (a former Oracle exec) and he’s been re-jiggering the entire unit’s infrastructure. To better serve key clients like Goldman Sachs and Twitter, Google is building more distributed cloud services to improve its reliability.
It’s not clear how quickly the company can make the shift. If it takes too long — and clients move to other providers — results could be cloudy (pun def intended).
