As Amazon dropped bombshell news on Tuesday, revealing its chief executive officer’s departure alongside its highest revenues yet, elsewhere in the tech and finance world, another tech giant announced earnings that underscored how good the pandemic, in general, and the holiday period, in particular, were to the sector.
Over the fourth quarter of 2020, Google parent Alphabet saw revenues climb to $56.9 billion, a 23.5 percent increase over the same quarter the year before. The momentum was led by acceleration in Google’s cloud business, whose sales clocked in at $2.6 billion for a 53 percent increase in sales.
In a statement, chief executive officer Sundar Pichai credited the numbers to the “helpfulness” of its products, “as well as the accelerating transition to online services and the cloud.”
No small part of that was fueled by workplaces quickly transitioning to remote workforces and cloud-based services during lockdowns. And that momentum won’t be going anywhere for at least the first half of this year, if not longer.
Meanwhile, Google has been actively pushing to strike more business deals in areas like retail and other industries, especially recently. Naturally, that all feeds into Pichai’s thinking that there are “significant opportunities to forge meaningful partnerships as businesses increasingly look to a digital future,” he said. On this front, Google’s rivalry with Amazon for the cloud — which is already intense — may heat up even further.
Both companies have been active in courting fashion and retail partners over the past few years, but especially during 2020, offering cloud resources, tools and support for brands large and small challenged by the pandemic.
Many of those brands sought new ways to reach consumers, and that’s one place where Google shines. The company has been building out its shopping and search services, as well as throwing development into business lines like YouTube, through new features like augmented reality beauty try-ons in video ads.
Perhaps for this and other reasons, the company saw striking growth in YouTube ad revenue. The video business raked in $4.7 billion, a 31 percent increase over last year.
The results mark the first time Google has broken out its YouTube and Google Cloud numbers, at least on the sales side. But it’s hard to interpret the health or profitability of these businesses without more clarity on its operating income or losses.
Overall ad revenue landed at $46.20 billion, a 22 percent growth over the $37.93 billion in the year-ago quarter. That gain is particularly meaningful, as it shows Google’s comeback after the initial stages of the coronavirus pandemic stalled advertising. At the time, the company saw ad revenue dip, forcing Google to report its first year-over-year drop in revenue.
According to Alphabet and Google chief financial officer Ruth Porat, the company’s performance across 2020 “was driven by search and YouTube, as consumer and business activity recovered from earlier in the year,” she explained. “Google Cloud revenues were $13.1 billion for 2020, with significant ongoing momentum, and we remain focused on delivering value across the growth opportunities we see.”
In other words, the contours around Google’s video and cloud businesses may seem amorphous, but they, along with search, will remain vital priorities. So on that front, the retail, fashion and other partner industries can expect sustained attention on continued development, features and services, as well as more partnerships.