Abu Dhabi, UAESaturday 24 October 2020

Google aims to leapfrog Amazon and Microsoft in cloud business by 2023, report says

Cloud is contributing nearly $8bn to the company's annual revenue

Google plans to increase the number of its cloud regions to 23 by 2020. AP
Google plans to increase the number of its cloud regions to 23 by 2020. AP

Google considered abandoning its entire cloud business last year due to “profitability concerns”. However, the company’s senior management dropped the plans and instead decided to invest more. The goal now is to surpass the industry’s top two companies Amazon and Microsoft.

Google wants to overtake market share of its rivals “in the next four years”, The Information, a US digital media company, reported on Tuesday.

“The Google unit is under pressure from top management to pass Amazon or Microsoft or risk losing funding. Google wants its cloud group to outrank one or both of its main rivals by 2023,” according to the report.

Google’s leadership also discussed who would be the “best to lead the effort and the difficulties of competing on things other than technology, such as sales and marketing”, said the report.

Last year’s meeting led to the appointment of former Oracle president Thomas Kurian as the chief executive of Google Cloud in January this year.

Mr Kurian hired many sales agents and top executives from enterprise software giants such as Oracle and SAP, in a bid to propel Google’s cloud

business.

However, the increase in the segment’s investment took a toll on the company’s earnings.

Hurt by spiralling investment in cloud infrastructure, parent company Alphabet’s net profit fell 23 per cent to $7.07 billion (Dh25.97bn) in the third quarter to September 30. Whereas, the total quarterly expenses grew almost 25 per cent year-on-year to $31.3bn during the period. It was the company’s highest quarterly expense.

Despite dipping profits, Alphabet’s chief executive Sundar Pichai is confident about the prospects of the company's cloud business.

Cloud is contributing nearly $8bn in revenue annually and the company plans to triple sales workforce over the next few years, said Mr Pichai in July.

“Cloud is the key growth driver for Alphabet,” he said.

Google, which stands in a distant third behind Amazon and Microsoft in cloud business, has plans to increase the number of its cloud regions to 23 by 2020. It will open six new cloud data centres early next year – three each in Seoul and Utah.

The company has also approved a "five-year budget of $20bn in spending on a data centre buildout and other outlays" needed to expand Google's cloud capacity, reported The Information.

Updated: December 19, 2019 06:24 PM

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