Alphabet's cloud business with billion-dollar loss

According to the current Business figures (PDF) from Google parent company Alphabet, the group saw its revenue increase 23.5 percent to $56.9 billion (€47.03 billion) during the 2020 fourth quarter covid pandemic. Profits increased 43 percent to $15.2 billion.

A large part of the revenue was generated by advertising revenues in the area of Internet search (+ 17 %, 31.9 billion US dollars) and on YouTube (+ 46 %, 6.9 billion US dollars). According to the business figures, the main reason for these high growth rates is the Covid pandemic, which has led to many people's lives increasingly taking place on the Internet.

US$1.24 billion loss in cloud business

In contrast, the figures for the cloud division, which were published for the first time, show an operating quarterly loss of 1.24 billion US dollars. According to CFO Ruth Porat, high upfront investments in the expansion of the infrastructure are responsible for this.

Revenue in the CloudShop rose by 47 percent to USD 3.83 billion. This makes Google, or Alphabet, one of the world's leading Microsoft one of the world's largest hyperscalers.

There were also losses in other businesses such as delivery drone developer Wing and robot car company Waymo, which together brought in a loss of $1.14 billion last quarter on revenue of "only" $196 million. The revenue comes almost entirely from the network access business Google Fiber and the health company Verily.

Better cost control for future projects

To the analysts present at the presentation of the quarterly figures via conference call, the chief financial officer explained that Alphabet will enforce more cost discipline in future projects. Recently, the Google sister company Loon, which wanted to bring internet to remote regions with antennas and balloons, was closed down.

Alphabet's reserves were $137 billion at the end of 2020. So the losses of the cloud division and the future projects are only comparatively small.

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