Google Cloud reported an operating loss of $ 1.2 billion in the last quarter of 2020, 4% worse than a year earlier, the technology giant reported on Tuesday. The unit lost $ 5.6 billion year-over-year, an increase of nearly 21%.
Still, the company’s overall business is doing well, with a net profit of $ 15.2 billion (43% more than the same period last year) with revenues of about $ 57 billion, up 23% more and superior to what analysts love.
Google (GOOGL) shares jumped more than 6% in out-of-hours trading.
While Google generates money from its core search advertising business, the company has been working for years to diversify its revenue through betting on hardware, cloud computing and several ambitious moon projects. The cloud, which has proven to be a major profit booster for rival Amazon, was believed to be among its most promising efforts.
Google’s cloud business sees sales grow rapidly, even as losses increase. Revenue from this unit topped $ 13 billion last year, up from nearly $ 9 billion the previous year.
Earlier this week, the company announced a six-year strategic partnership with Ford, part of which makes Google the preferred vehicle manufacturer provider for cloud data storage.
“Obviously, we’ve been investing aggressively given the substantial market opportunity we see,” Google chief financial officer Ruth Porat said Tuesday in a earnings call, noting “the success of Google Cloud with large companies that sign long-term commitment agreements “.
The business’s operating loss in the cloud “reflects that we built our organization significantly before revenue,” he added.
U.S. tech giants have further consolidated their dominance during the coronavirus pandemic, even as economies around the world suffered huge setbacks: Facebook’s $ 11.2 billion profit last quarter was more than ‘50% higher compared to the previous year; Microsoft (MSFT) recorded record revenue; i Amazon (AMZN) exceeded analysts ’profit expectations by more than $ 1 billion.
But many of these companies are under intense pressure from regulators that will likely intensify further in 2021. Google, as Facebook (FB), faces a massive antitrust lawsuit, as well as questions about its role, mostly through the YouTube video platform, in spreading misinformation about last year’s U.S. presidential election.
Google is also facing pressure from within, with hundreds of employees forming the company’s first union in early January.
And, despite its growing dominance, especially in areas such as search and online advertising, the company has withdrawn from several high-profile projects in recent weeks.
On Monday, Google shut down internal video game development efforts that were part of its Stadia gaming platform, just days after the Alphabet parent said it would end an initiative called Loon that used giant balloons to transmit Internet to people in areas. remote the world.
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