Alphabet’s earnings call was yesterday, and as usual, the company took in a lot of money ($86.31 billion), thanks mostly to ad click-through rates being at a certain level. More interesting, though, are the product numbers tucked away in the report.
For the good news, a big announcement was the success of one of Google’s biggest subscription plans, Google One, which CEO Sundar Pichai said is “just about to cross 100 million subscribers.” Google One is mostly a cloud-storage plan for Google accounts, allowing users to pay a monthly fee to get more than the 15GB of Drive and Gmail storage that comes free with a Google account. Pichai says the company’s whole subscription business—which is going to be Google One (storage), Google Workspace (business accounts), YouTube Premium (ad-free YouTube), and YouTube TV (a cable TV alternative)—are up to $5 billion in annual revenue. That’s up fivefold since 2019.
Speaking of subscriptions, one of Google’s most expensive, the $350-a-year NFL Sunday Ticket, didn’t have any hard numbers associated with it. Google SVP and CBO Philipp Schindler said the company was “pleased with the NFL Sunday Ticket signups in our first season.” Sunday Ticket was always a money-loser for DirecTV, and that was before the price shot up half a billion in the streaming era. Google is now reportedly on the hook to pay the NFL $2 billion a year for the next seven years. When asked about a return on investment for the project, Schindler only cited “solid” advertiser interest and that “NFL Sunday Ticket supports our long-term strategy and really helps solidify YouTube’s position as a must-have app on everyone’s TV set.”
The year 2023 was also the first time Google Cloud recorded a profit. Cloud is Google’s attempt to compete with Amazon Web Services as a platform for the cloud-based infrastructure needs of developers. After years of investment and growth, Cloud made $864 million in Q4 2023. It lost $186 million over the same period in 2022. According to a recent Canalys report, Google Cloud’s market share is in a distant third (10 percent) behind Microsoft Azure (25 percent) and the leader, AWS (31 percent).
For a while, Cloud’s third-place position could at least be offset by stronger growth than its competitors, but that Canalys report now has Microsoft with the highest growth rate, thanks to interest in its AI solutions. Microsoft is partnered with OpenAI, the creators of ChatGPT. Pichai spent a lot of time talking about Google Cloud’s competing AI work, but OpenAI has a level of hype and interest that can’t be matched by Google’s Bard/Gemini talk.
I don’t think we ever got a clear number for exactly how many people Google laid off in 2023. The company announced 12,000 layoffs in January, saying US employees had “already” been notified, while international employee layoffs would “take longer due to local laws and practices.” The company then laid off various employees across divisions throughout the year. Whatever the final cuts ended up being, the overall headcount only changed from 190,234 in December 2022 to 182,502 at the end of 2023, a net loss of about 8,000 people. Google was still hiring a lot during those layoffs.
One hundred eighty-two thousand employees is still a lot. Google’s headcount at the end of 2021 was 156,000 employees, and some Wall Street investors want to see the company return to that number. Pichai told employees to brace for more layoffs “throughout the year,” though the CEO says they wouldn’t be at the scale of 2023. Google’s downsizing cost a lot of money, with the company spending $2.1 billion on employee severance and $1.8 billion on office space exit charges for 2023.
Listing image by Getty Images | Alexander Koerner