Google Cloud business turns profitable for the first time

Google-parent Alphabet reported its quarterly results yesterday. The company has reported that Google Cloud has become profitable for the first in the three years since its began reporting its metrics.

As per the announcement, Google generated cloud revenue of $7.4 billion in Q1 2023. This is 27.5% up from the $5.8 billion revenue reported last year. The company also reported a gain of $191 million in operating income; last year, it reported an operating income loss of $706 million.

Google Cloud offers infrastructure and platform-as-a-service for costumes build and run their applications. Here, Google competes with Amazon AWS and Microsoft Azure. It also offers a Google Workspace productivity software package that has Gmail, Docs, and Sheets, among others. It now accounts for 10% of Alphabet’s total revenue. Notably, just three years back in 2020, Google reported a loss if $5.6 billion in its cloud unit. 

Overall, Alphabet’s revenue was reported to be $69.79 billion, 3% higher than $68 billion last year. The ad revenue at $54.55 billion did beat analysts’ expectations but fell from last year’s number. Revenue from Google Search and others was reported at $40.36 billion, up from the previous year’s $39.62 billion.

In January, the company announced that it would be cutting down 12,000 jobs and letting go of 6% of its total workforce. “Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today,” Alphabet chief Sundar Pichai had said then in a blog.

Additionally, Google Search also faces heat from GPT-4 powered Microsoft Bing AI search engine. Google has long held a dominant position in the search market, but Bing AI seems to be giving it tough competition. A New York Times report this month said that electronics company Samsung may be considering replacing Google Search with Bing AI in its smartphones as the default search engine.