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Google's cloud business is losing money

Post Date: Wednesday, February 3, 2021


San Francisco (CNN Business)Google is providing a deeper look into the financials of its cloud business, and it doesn't look great.

Google Cloud posted an operating loss of $1.2 billion in the final quarter of 2020, 4% worse than a year earlier, the tech giant reported Tuesday. The unit lost $5.6 billion for the full year, an increase of nearly 21%.
The company's overall business is doing just fine, however, with a net profit of $15.2 billion — up 43% from the same period last year — on revenues of nearly $57 billion, up 23% and higher than analyst estimates.
Google (GOOGL) stock jumped more than 6% in after-hours trading.
While Google mints money from its core search advertising business, the company has been working for years to diversify its revenue through bets on hardware, cloud computing and various ambitious moonshot projects. The cloud, which has proved to be a huge profit driver for rival Amazon, was thought to be among its most promising efforts.
Google's cloud business is seeing sales grow fast even as losses mount. Revenue from this unit topped $13 billion last year, up from nearly $9 billion in the prior year.
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"We've obviously been investing aggressively given the substantial market opportunity we see," Google's chief financial officer, Ruth Porat, said on an earnings call Tuesday, pointing to "the success Google Cloud is having with large enterprises which are signing meaningful long-term commitment agreements."
The cloud business's operating loss "reflects that we have meaningfully built out our organization ahead of revenues," she added.