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Google Q4 results show businesses are buying into its public cloud

The Google Cloud Platform is earning the search engine giant $1bn per quarter. Expect more cloud investment this year

In its fourth quarter 2017 financial update, Google reported revenues of $32.3bn, up 24% year on year, with its cloud services contributing $1bn per quarter to the business.

Revenues for Europe, the Middle East and Africa (Emea) were $10.3bn, also up 24% year on year.

The company said it had experienced substantial growth in hardware, cloud and its Play app store. It said it was also getting ready to offer self-driving cars commercially in the US city of Phoenix.

In a transcript of the earnings call, posted on the Seeking Alpha financial blogging site, CEO Sundar Pichai said: “We’ve been laying a foundation for the next decade as we pivot to an AI-first company, powering the next generation of Google products like the Google Assistant. And we have been making substantial investments in our three biggest bets – cloud, YouTube and hardware.”

Pichai said the company was winning larger, more strategic cloud deals with customers, with the number of deals worth more than $1m across all cloud products more than tripling between 2016 and 2017.

The company announced recently that it would build five more datacentre regions for the Google Cloud Platform plus three subsea cables, as part of an overall strategy to invest $30bn in building out its cloud infrastructure.

Asked about the EU’s General Data Protection Regulation (GDPR), Pichai said: “I think it’s important to put privacy first for European citizens, and we are very supportive of the work that’s under way there. And we are committed to complying with GDPR across all the services that we provide in Europe. There is still time.

“As a reminder, it doesn’t go into effect until May or so. And we are working to make sure all our products are ready. And we will work hard to make the transition well. We have long had constructive conversations with the European Commission.”

New growth opportunities for Google, called “Other Bets”, increased revenue by $1.2bn for the full year of 2017. This represents growth of 49% compared with 2016, primarily driven by the take-up of the Nest internet-connected central heating system, Fiber, the company’s TV service, and Verily, a Google initiative that uses machine learning in life sciences.

Second wave of growth

During the earnings call, Google CFO Ruth Porat said: “We are focused on building a second wave of growth within Google over the medium and long term which includes the rapidly growing revenue businesses in Google, cloud, hardware and YouTube. With respect to cloud, we’re seeing the benefits of a fully featured enterprise offering and an expanded go-to-market team, bringing our advantages in infrastructure, data analytics, security and machine learning to more customers.”

Porat said the company was continuing to invest heavily in compute power to support the expanding application of machine learning efforts across Alphabet as well as additional requirements for Google’s Cloud, Search and YouTube businesses.

As Computer Weekly has reported previously, Google has set its sights on speeding up the time it takes enterprises to create custom machine learning models through its Cloud AutoML service suite.

Porat also gave an update on the company’s Waymo self-driving car initiative. She said Waymo had surpassed four million miles of driving in the real world, taking only six months to achieve the last million miles compared to 18 months for the first million.

She said the company was looking to provide a commercial self-driving service in 2018. “We’re piloting in Phoenix, including ride sharing and personal use vehicles, logistics, deliveries and working with cities to help them address public transportation objectives,” she said. “Our first commercial application is the ride service that we will launch in 2018 that would be open to members of the public in Phoenix. Riders will be able to use the Waymo app to have one of our fully driving, self-driving cars without a driver at the wheel.”

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