Alphabet, Google’s parent company, recently reported impressive earnings, totaling $86.31 billion in its latest earnings call. The bulk of this revenue was attributed to the sustained high click-through rates on advertisements. However, the real highlights can be found in the details of the report.
One noteworthy announcement pertains to the success of Google’s prominent subscription service, Google One. CEO Sundar Pichai proudly revealed that Google One is on the verge of reaching 100 million subscribers. Google One primarily offers a cloud storage plan for Google accounts, allowing users to pay a monthly fee for additional storage beyond the free 15GB included with a standard Google account. Pichai disclosed that the company’s entire subscription business, encompassing Google One, Google Workspace, YouTube Premium, and YouTube TV, has achieved an impressive $5 billion in annual revenue, marking a fivefold increase since 2019.
In the realm of subscriptions, Google’s $350-per-year NFL Sunday Ticket, while lacking specific numbers, received positive feedback from Google SVP and CBO Philipp Schindler. The streaming service, now responsible for a $2 billion annual payment to the NFL for the next seven years, is seen as a strategic move to solidify YouTube’s position as an essential app on every television set.
A notable milestone for the year 2023 was Google Cloud’s first recorded profit. After years of investment and growth, Google Cloud generated $864 million in Q4 2023, a remarkable turnaround from the $186 million loss during the same period in 2022. Despite securing a distant third place in market share (10 percent), Google Cloud faces stiff competition from Microsoft Azure (25 percent) and the leader, AWS (31 percent), with Microsoft experiencing the highest growth rate, fueled by interest in its AI solutions developed in partnership with OpenAI.
Speaking of layoffs, Google announced 12,000 job cuts in January 2023, impacting both US and international employees. While the final tally remains undisclosed, the overall headcount only saw a net decrease of approximately 8,000 people, from 190,234 in December 2022 to 182,502 by the end of 2023. Despite these workforce adjustments, Google continued its hiring initiatives throughout the year.
With its headcount at 182,502, Google faces pressure from some Wall Street investors who advocate for a return to the 2021 headcount of 156,000 employees. CEO Sundar Pichai cautioned employees to expect more layoffs throughout the year, although he reassured that they would not reach the scale witnessed in 2023. The downsizing efforts incurred significant costs for Google, including $2.1 billion for employee severance and $1.8 billion for office space exit charges in 2023.
