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Why AWS Makes Money and Google Cloud Doesn’t

Google’s cloud computing arm is the company’s biggest hope of creating a substantial moneymaker outside of advertising, but it has been struggling to make up meaningful ground against industry pioneer Amazon Web Services. That extends to profitability: Last year, despite generating $19 billion in revenue, the kind of scale that generally brings profits, Google Cloud lost more than $3 billion. And the unit lost more than $17.6 billion over the past four years.

To put those losses in perspective, the above chart shows that AWS generated about $13 billion in profits from mid-2014 to mid-2018, a four-year span in which it was generating around the same amount of revenue that Google Cloud has generated in the past four years.

The data underscore how Google Cloud, despite recent financial improvements, is contending with a host of expenses and business challenges AWS doesn’t have. They also highlight why Google Cloud will have a hard time getting within striking distance of AWS’ profit margins in the future. Several former employees and people who do business with Google Cloud said the issues range from having fewer high-margin services to sell to customers to having higher overhead costs and a more lackadaisical engineering culture. In a positive sign, Google Cloud CEO Thomas Kurian last month told colleagues during an internal all-hands meeting that he expects the cloud unit to be profitable later this year, according to a person who viewed the event.

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