Google Cloud posted an operating loss of $ 1.2 billion in the last quarter of 2020, 4% worse than a year earlier, the tech giant reported Tuesday. The unit lost $ 5.6 billion for the year, up nearly 21%.
However, the company’s overall business is doing fine, with net profit of $ 15.2 billion – up 43% from the same period last year – on sales of nearly $ 57 billion, up 23% and higher than analysts had estimated.
Google(GOOGL) Shares are up more than 6% in out-of-hours trading.
Although Google makes money from its core search advertising business, the company has been diversifying its revenues through betting on hardware, cloud computing and several ambitious moonshot projects for years. The cloud, which has proven to be a huge profit driver for rival Amazon, has been considered one of the most promising endeavors.
Google’s cloud business is seeing sales grow rapidly even as losses increase. Sales of this unit last year were $ 13 billion, compared to nearly $ 9 billion in the previous year.
Earlier this week, the company announced a six-year strategic partnership with Ford, making Google, in part, the preferred provider for cloud data storage.
“We have clearly invested aggressively given the substantial market opportunities we see,” said Ruth Porat, Google’s chief financial officer, during an earnings call Tuesday, noting “the success Google Cloud has with large companies signing meaningful long-term contracts. . ”
The cloud company’s business loss “reflects that we have meaningfully built our organization beyond revenue,” she added.
US tech giants further bolstered their dominance during the coronavirus pandemic, even as economies around the world suffered massive setbacks – Facebook’s $ 11.2 billion last quarter profit was more than 50% higher than the previous year; Microsoft(MSFT) record turnover booked; and Amazon(AMZN) exceeded analyst earnings expectations by more than $ 1 billion.
But many of those companies are under heavy pressure from regulators, which are likely to intensify further in 2021. Google, nice Facebook(FB), is facing a massive antitrust case and questions about his role – particularly via video platform YouTube – in spreading misinformation about last year’s US presidential election.
Google is also under pressure from within: hundreds of employees formed the company’s very first union in early January.
And despite its ever-growing dominance, especially in online search and advertising, the company has pulled out of several high-profile projects in recent weeks.
On Monday, Google stopped in-house development of video games that were part of the Stadia gaming platform just days after parent company Alphabet said it would phase out an initiative called Loon that used giant balloons to beam the Internet to people in remote areas. the world.
