[HN Gopher] Google Cloud reported an operating loss of $5.6B in ...
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Google Cloud reported an operating loss of $5.6B in 2020
Author : belter
Score : 74 points
Date : 2021-08-01 20:15 UTC (2 hours ago)
(HTM) web link (www.theregister.com)
(TXT) w3m dump (www.theregister.com)
| AgentK20 wrote:
| HOW?
|
| Google Cloud Platform has MASSIVE markups compared to equivalent
| service providers, either from "the big three" or smaller service
| operators. These smaller service operators have far less margin
| to work with, yet manage to not only break even but to turn a
| profit! Either GCP has some product that is a metaphorical black
| hole consuming all of their excess revenue, or Google generally
| is spending far too much money doing the same thing that everyone
| else is doing.
|
| One of the things I've noticed GCP prides themselves on is
| uptime, and I'm wondering whether they're doing something like
| _doubling_ their costs to have seven nines of uptime for the
| entire platform, which practically doesn't matter for anyone
| other than a handful of clients (healthcare, government,
| military, etc)
| my123 wrote:
| AWS just has as much uptime if not a bit higher, so can't be
| that...
| ununoctium87 wrote:
| There is another option... Creative accounting.
|
| It's possible that the figures have been shifted, bent, and
| twisted to report a loss on what could actually be their
| biggest profit, as you so question.
| Spooky23 wrote:
| They are in a huge growth phase. Any rate-based service in a
| hyper-growth mode is going to lose money as they make capital
| and personnel investments.
|
| I used to run a pre-O365 large exchange shared service that
| topped off at ~200k users. When we were growing 50% year over
| year, we were "losing" a fortune depending on how to measure
| it. You want to do that, as making a profit today may mean
| losing the lifetime value of a long term customer.
|
| I think Google has a good thing going. AWS is the incumbent,
| but has its own legacy to deal with. Microsoft dangles carrots
| for Azure, but the Microsoft sales culture will start beating
| customers over the head with the carrots.
| onelovetwo wrote:
| I think they may be investing a lot on future cloud
| infrastructure. they're pouring a lot in AI chip design which
| will dominate in 5+ years specially when cars become fully
| self-driving.
| wongarsu wrote:
| If they put things like TPU development and TPU advertising
| costs (Google Colab) into the Google Cloud budget I can
| easily see that being responsible for a notable part of this
| loss.
| nomoreplease wrote:
| It says in the article this is mostly due to headcount and
| compensation. That's a recurring expense and not a TPU that
| can be sold
| wongarsu wrote:
| TPUs are developed by people (aka headcount that gets
| compensation).
| belter wrote:
| "The increase in operating loss in both periods was driven by
| an increase in total expenses of $5,103 million from 2019 to
| 2020...Operating expenses increased primarily due to
| compensation expenses (including SBC), largely driven by an
| increase in headcount. Additionally, data center and other
| operating costs increased in both periods."
| lumost wrote:
| This may not be a bad financial investment if the effect is
| to centralize internal google infrastructure investments
| under the "cloud" banner e.g. If google requires a Tier-1
| cloud service for their operations but cannot use an
| alternative cloud for strategic reasons.
| gigatexal wrote:
| Though this last quarter only a loss of just shy of 600M
| jsnell wrote:
| Right, the current title is both editorialized (the article
| itself is about some exec leaving) and six month old news.
| doctor_eval wrote:
| Well that would make an impressive addition to
| https://killedbygoogle.com/
| mark_l_watson wrote:
| GCP will do fine. I worked as a contractor at Google in 2013 and
| learned to love their internal infrastructure, and in many ways
| GCP is similar. I preferring GCP but most of my customers work on
| AWS, so Google does have an uphill climb.
| deepersprout wrote:
| I hope they don't terminate it like they did with a lot of other
| producs. GCP is a pleasure to work with.
| why_only_15 wrote:
| (disclosure: i work on gcp) i asked this question to one of the
| people in my orientation and he said that if you don't believe
| what they say, one real thing they're doing is hiring bunches
| of new people to work on gcp. also, gcp runs on the same
| underlying infrastructure as the rest of google, so were i to
| guess just keeping it running would be relatively cheap.
| dredmorbius wrote:
| Similar rationales were argued for, e.g., Google+.
| closeparen wrote:
| In my experience hiring binges are harbingers of layoffs and
| cancellation much more so than stability.
| runawaybottle wrote:
| What's rationale behind this? Genuinely curious, we
| recently had a hiring binge but the product is in bad
| shape.
| mc32 wrote:
| It probably means price hikes in the future.
| pxue wrote:
| Internal Google uses gcp / firestore, doesn't make sense to
| discontinue a part of that at this point
| freemint wrote:
| Could this be due to expansions, buying new equipment during a
| silicon price hike which will be paid off in the future?
| iratic0 wrote:
| Anyone have anymore current figures on this? Why is AWS more
| profitable than Google Cloud?
| reilly3000 wrote:
| Isn't it safe to say that GCP is a perfect place for Google to
| take losses from a tax perspective? They can just keep building
| new DCs, upgrading gear, creating partnerships, and buying
| customers. I feel like they could make it profitable any time
| they like, and they certainly did last quarter.
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