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points by whakim 14 hours ago | 0 comments

I don't really agree: it's pretty simplistic to boil Google's history down to two products developed 20 years ago.

I'm not really sure why you say that cloud compute isn't a moat. It's an enormous investment to compete there; there's a reason even large companies buy compute from GCP/Azure/AWS or even if they have their own compute don't attempt to compete. Additionally, GCP has been an enormously successful 'bet' for Google over the past decade.

Google has also turned subscription revenue for their various services into a major revenue stream; it'd be hard to call those various services (Google Drive, Google Play, etc.) anything other than successful.

Chrome doesn't generate revenue by itself, but it certainly drives advertising revenue across the rest of Google's portfolio and was developed in-house.

Finally, it's pretty strange to credit the success of YouTube as a revenue stream with a small loss-making company that was acquired in 2006 rather than Google, who has run it for the past 20 years.

[–] shadowgovt 13 hours ago

It's not a moat because it's a commodity.

Enterprises actively do not want Cloud provider's services distinguished by anything other than speed, cost, and reliability, because features imply lock-in. They'd rather have someone else's computer as bare-metal and run features atop that.

That's a recipe for racing to the bottom in the cloud space against the other providers, where the wins are very raw: what hardware did you predict two years ago you needed today, what breakthroughs in information structuring have your competitors not yet implemented in their own clouds, etc.

It's raw capitalistic competition, and that's good for consumers... But companies don't want that because it's a path to net-neutral revenue in the long-term, which is not how you put your stock on the moon.

[–] whakim 8 hours ago

The history of the cloud computing market belies your argument, in that the entire market has grown significantly since 2020, with all 3 big cloud providers >3xing their operating income (and 3-5x'ing their revenue) over that period. That isn't what you'd expect from undifferentiated, interchangeable commodities.

The scenario you've described sure sounds like the enterprise ideal, but it probably isn't the reality: in fact, some combination of high switching costs, feature differentiation, and/or price insensitivity means you have 3 highly profitable businesses.

[–] motionlessveloc 10 hours ago

If your business is tech and compute is a major cost of business, then sure, you want to avoid lock in.

But if your business is not tech, it makes a hell of lot of sense to pay a few bucks extra for a managed service like Cloud SQL to host your databases and let Google handle the security patches and backups etc, instead of hiring your own DBA to do it for you.

[–] jgalt212 14 hours ago

> GCP has been an enormously successful 'bet' for Google over the past decade.

I disagree on this. It's not clear how much money they are actually making and how much revenues are shifted over from other business lines to GCP because GCP earnings growth is / was valued higher than other business lines by the markets.

[–] whakim 13 hours ago

I mean, $11B in quarterly operating income ($33B in revenue) is clearly quite a lot. The only reasonable argument here is that this includes hardware sales (i.e. TPUs), but it is still a lot even if you subtract that. I think many folks internalized the narrative that GCP was an also-ran many years ago (when that was demonstrably true), but haven't updated their priors now that revenue is almost the same as (and may soon surpass) Azure's.

[–] HDThoreaun 12 hours ago

Google has spent $132 billion on capex this year. Most of that money is going to GCP. We have to think about the hundreds of billions being invested to contextualize the profit numbers. $40 bill a year is not enough to justify the capex they’re partaking in, GCP still needs to grow a lot to be successful.

[–] whakim 9 hours ago

I don't think it's correct to view AI capex as simply booking profit for Google Cloud - theoretically almost every aspect of Google's business should indirectly benefit from those investments. Bigger picture though, the bet behind that staggering capex is future profits, not current profits (see: OpenAI, Anthropic). Even if you think that's a stupid bet, the evidence won't be in 2026 income, it'll be in future income.

[–] motionlessveloc 10 hours ago

The vast majority of that money is going to AI. Some part of it is for internal consumption, some of it is for resale to GCP customers, but it is not some sort of loss making subsidy to prop up GCP.

[–] HDThoreaun 9 hours ago

All the AI revenue is booked under GCP. This isnt any different from people saying openai and anthropic are selling a dollar for 50 cents

[–] spwa4 13 hours ago

That's the big criticism on Microsoft, not Google. On GCP this isn't the case, because Google does not have a huge install base of MS Office to give "free" 50% Azure credits (but paying the same) faking their cloud numbers.

GCP has a reputation on being the fastest compute and network available. Also the most bang-for-your-buck (on hyperscalers) ML infrastructure by far (because TPUs)

Amazon is "the default" (and most expensive). Works with everything.

Azure is "Microsoft cloud". It's not fast, cheaper but certainly not cheap, ...

But of course that should be interpreted as GCP being 10x the cost of on-prem hardware (for equivalent storage/performance). Azure 13x or so. And Amazon a solid 20x (mostly because none of their products deliver the performance advertised and because if you buy 1 thing of Amazon, they bill you for 20 different things). Even with the price hikes a server under your desk (not the same, I know, however, once you have 20 servers in 2 rooms in 2 buildings and kubernetes running the workloads it is the same in reliability)

[–] cyberax 13 hours ago

GCP is a joke. Their sales reps are useless, and their customer support is non-existent. They are about 8% of the cloud computing marketshare as a result.

I hate Azure, but Microsoft is at least trying to sell it properly. You get a human you can talk to and their support is responsive (although it's also useless).

> Finally, it's pretty strange to credit the success of YouTube as a revenue stream with a small loss-making company that was acquired in 2006 rather than Google, who has run it for the past 20 years.

As a Youtube user, I don't really see any improvements in it (aside from technical ones) compared to 10 years ago.

[–] whakim 9 hours ago

> GCP is a joke. Their sales reps are useless, and their customer support is non-existent. They are about 8% of the cloud computing marketshare as a result.

This is an outdated or straight-up incorrect take. In the past quarter, Google Cloud's revenue was ~$30B, just shy of Azure (~$33B) and well shy of AWS (~$45B). That's about 28% of the cloud computing market excluding other players. Additionally, Google Cloud has grown a lot over the past few years and has been steadily eating away at AWS and Azure's market share; by next year it seems likely that it'll be bigger than Azure.

> As a Youtube user, I don't really see any improvements in it (aside from technical ones) compared to 10 years ago.

Sure, it's a website that serves videos (and ads); just because the fundamental proposition hasn't changed doesn't mean that Google hasn't done a hell of a lot of work into turning YouTube in a business that earns tens of billions of dollars a year.

[–] shadowgovt 13 hours ago

Most of the improvements have been keeping it running in the face of being the place everyone stores and retrieves video, and that's a lot of invisible work (but is the real reason you don't really see working YouTube competitors; it's a technically challenging big-iron problem).

[–] WarmWash 12 hours ago

The knife in the back of Youtube competitors is that people ad-block because they don't like ads, not because they have some kind of moral compass. Youtube mostly tolerates ad-blocking, which pretty much cements it in place as the absolute best streaming service (no ads, no subscription, unlimited free consumption).

The result is that it's basically impossible to get off the ground to compete with yt, because early adopters are almost universally tech forward. And tech forward people don't pay for shit (except the 1-5% who do).