Google revenues increase while cloud unit books losses

3 Feb 2021348 Views

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The company lifted the lid on Google Cloud for the first time, disclosing that the division lost $5.6bn last year.

Alphabet, Google’s parent company, reported a 23pc increase in revenues in last quarter of 2020 with advertising sales picking up at the end of the year.

It booked $56.9bn in revenue in the fourth quarter, leading full-year revenues to top $182.5bn, and it ended the year with $41.2bn in operating income.

The tech giant had seen a slowdown in advertising revenue in mid-2020 as advertisers re-evaluated budgets during the pandemic. That business has rebounded strongly, likely driven by festive ad buying.

“Our strong fourth-quarter performance, with revenues of $56.9bn, was driven by Search and YouTube, as consumer and business activity recovered from earlier in the year,” chief financial officer Ruth Porat said.

Chief executive Sundar Pichai added that the results reflect the “accelerating transition to online services and the cloud”.

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This is the first time that Google reported more detailed financials for Google Cloud, its cloud computing business. It made a loss of $5.6bn in 2020 on revenues of $13.1bn. The loss reveals that the business still has a way to go as it competes with Amazon Web Services, which is profitable.

Alphabet’s Other Bets segment includes operations like its self-driving car work at Waymo and life sciences business Verily. The R&D-intensive division continues to lose money, to the tune of $4.5bn in 2020, but the company has recently shown some willingness to cut ambitious but loss-making endeavours such as Loon.

While its core financials remain strong, the last few months have seen Google dance around its fair share of controversies. It is caught up in antitrust lawsuits in the US that are challenging its market dominance. In Europe, more competition investigations into its business are on the cards.

In Australia it is locking horns with the government over a proposed media law that would require it to pay news businesses for use of their content, and Google has threatened to pull services in Australia.

Much like Facebook, Twitter and others, Google also faces questions around how it moderates and removes hateful or illegal content, an issue exacerbated by the US presidential election and the recent attack on the Capitol.

Internally it faces questions from its own staff and contractors over myriad labour issues that were recently brought to the fore by Dr Timnit Gebru, who claimed she was fired for speaking out.

Jonathan Keane is a freelance business and technology journalist based in Dublin

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