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2020 Q4 Alphabet Earnings Release [pdf] (abc.xyz)
103 points by lawrenceyan 31 days ago | hide | past | favorite | 89 comments



Google still growing revenue at 23% YoY?

Facebook, Apple, Amazon, Microsoft and Google. All of them beat even the most optimistic estimates.

Will have to dig into whether the cost of being Apple's default search engine has risen. Generally speaking it should $10 / user / year. Apple just reported another 200M increase in Active Devices. There should be some hint, or may be it will have to wait until next contract negotiation.


I personally think Google can continue at this pace as GCP value is still not unlocked completely. I can't comment on the other services but in my previous job we did shift a lot of compute instances stuff to GCP from AWS because of ease of orchestration. If other services catch up to AWS and with unique offerings like Spanner, a lot of room for them to grow.

Though it is quite scary how these companies are so big and yet growing so fast, a lot of this is because of usurping new markets, like Apple did with Airpods. I just hope this doesn't suffocate smaller players in due time.


It's truly astounding for a company this large, and this old, to be able to continue growing revenue at this rate.

Even more astounding is that they're growing earnings even faster.

Simply unheard of for margins to expand at this point in a company's lifecycle.


Serious question, do you think threatening to remove google as the default search engine is a serious threat? I use ddg and tried Bing when they were paying people to use it, but I have no illusions that google is by far the most superior search engine. It would be weird if they switched the default.

But then again... apple maps.


> do you think threatening to remove google as the default search engine is a serious threat?

It would be if Apple made a search engine. Media will spin this as a Search Engine that values your privacy from Apple. It is the best thing ever etc. Given Apple's consumer branding, as long as it isn't so bad people will use it.

The problem is I dont see that happening. $10B of pure profits is a large amount of money doesn't matter how you slice and dice it.

Making a half decent search engine is still very hard. They are happy to squeeze Google, making less information available to Google in the name of privacy, all while eating away all the profitable Smartphone market shares.

That is one reason I dont quite like current Apple. It reeks of hypocrisy. Stop attacking Google as evil, painting themselves as Saint, all while happily receiving Billions of dollars. But current media seems to like this idea, and it fit well with the current US political spectrum.


You could argue that Apple provides real value to users (not just with better devices/UX, but now also with better privacy), and their massive profits are just a reflection of that value.

Because Apple makes most of its money from device sales, they have less of an incentive to snoop on their users. Their business model is just better aligned with something that users are actually starting to value now: privacy.


Apple gets ~$12 billion a year for making Google the default search engine on Safari. Apple's revenues in 2020 were $274.5 billion, so this counts to something like 8% of Apple revenues. 8% is either big enough not to discount in the final revenue calculation, or small enough that they can choose to hit Google with its revocation.


I think it would be better to use Profits percentage than revenue. There are COGS and other running cost with Services. Even App Store has curation cost, processing fees, hosting, Store Credit Rebate, Promotion and Marketing.

Search Engine Placement has literally Zero. It is pure 100% raw profit.

Apple reported net income of 57.41 billion U.S. dollars in its 2020 fiscal year.


Wow, Apple's revenues put it #16 in revenues of countries, ahead of Mexico [0]. Although if Apple were a country, GDP would probably be a better measure; even so it's still around #45, depending who is evaluating GDP [1].

[0] https://en.wikipedia.org/wiki/List_of_countries_by_governmen...

[1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...


I think Google's brand power is by far the most important thing here. When people don't find what they're looking for on Google, the figure it's hard to find, or they need to learn how to query better. When people don't find what they're looking for on Bing, they think it's Bing's fault.

Edit: as for your actual question: possibly. In my opinion the quality difference between Google & Apple Maps is greater than Google vs Bing search.


Apple maps is inferior but it looks pretty nice and its their own service. I couldn't imagine them rolling out Bing as the default search engine. That would seem out of character.


Depends what you are using your search engine for. Getting the actually most popular thing in the area where there's a lot of competition? They're good at that. But when trying to find some obscure string in a context it's just hopeless. They seemed to have completely given up on the idea of being able to somewhat grep through the web. I often won't get results for queries which DDG and Bing have pages for.

Which I don't get, they probably could afford to have even a completely separate backend for quoted strings and store way more data than DDG.


> that google is by far the most superior search engine.

Is it? I find the amount of censorship and manipulation in Google's results since last yeast has really affected its performance on my end.

It's just alarming when you can search for something in Google and not find it, then type the same query in Bing or DDG, and you get the desired result immediately. And I do mean absolutely benign searches like news articles and published research.


> searches like news articles and published research.

Google does not censor real news articles. Nor legit research AFAICT. A quick Bing and DDG search along with browsing of the Wikipedia article on this topic[1] yielded nothing major.

If you want to "research" on how Sandy Hook school shooting was a false flag, that California wildfires were set by Jewish space lasers, or other the QAnon conspiracies, yeah Google sucks. But if you are doing actual research for work or school, neither DDG nor Bing come close. I used DDG heavily when I was in China, and it was garbage for work.

After living China, I am well aware how horrible censorship is to democracy. But you know what's worse? How Facebook's algorithms have radicalized our country. Most members of my family (our country for that matter) get their news from Facebook, much if it is the most extreme garage to keep engagement numbers high, not good journalism based on facts.

I'm fairly certain page rank demotes this garbage because it’s poor quality, not as a service to our society. But as long as Facebook/OANN continue to profit off of tearing our society apart, it's probably a good thing. Of course, teaching critical thinking in school would negate this problem, but that’s a too much to ask from a culture that puts more value in sports than education.

[1] https://en.wikipedia.org/wiki/Censorship_by_Google


I find conspiracy theories fun so I search for them. You can never get the actual conspiracy websites on Google, just debunking articles and often a Google warning box as well.

Compare the results for ‘fake moon landing’ on Google and bing. The results are pretty stark.


Do you have examples of such discrepancy?


> Apple just reported another 200M increase in Active Devices.

Don't forget to subtract the ones in China.


The first page after doing a Google search is inundated with ads.

Not to mention the ad proliferation on YouTube.


Operating margin 28% and climbing.

Net income $40B for the year through 12/31/2020.

The growth in revenue at 20% is impressive given these players are already so massive.

One big takeaway, AWS is CRUSHING GCP on the financial side. There is basically a 50%?? delta here? Ie, AWS is +28% margin, GCP -30% margin? Still GCP is growing briskly though much smaller.

In short, AWS could do a lot more to compete on price if they wanted.


> In short, AWS could do a lot more to compete on price if they wanted.

Maybe. GCP can be subsidised by Google, but AWS is the breadwinner for Amazon.


> One big takeaway, AWS is CRUSHING GCP on the financial side.

Or, Google is investing more to compete? AWS is financially stable now because of its investments in initial years. GCP revenue growth does seem promising.


I'm going to repost a comment I made a couple years ago because it's still 100% relevant:

------

Incredible that Google has been able to sustain almost 20% revenue growth for so long - much longer than most people expected. For the past 6 or 7 years people have been predicting that Google's growth would soon slow because:

(a) The number of ads on a search result page had reached saturation point

(b) The percentage of people using the internet in rich countries had reached saturation point

Although real, these effects have proved to be outweighed by other, less limited factors of growth; in particular Google's ability improve the quality of match between advertiser and user. Even now I think there is significant room for Google to improve this matching - eg. when I put an iPad Pro in my online shopping basket at apple.com but don't buy it, why don't I then see iPad ads on YouTube? When I give Tesla $1,000 to reserve but not buy a Model 3, why don't I then see Model 3 ads reading The New York Times? Apple and Tesla are leaving money on the table, and when they wake up Google will make even more money


I fear this will only encourage the frankly absurd number of ads that have been on Youtube videos lately.


You can see this kind of comment in every YouTube related posts, please, there's no free lunch, either pay for the subscription or use tools to block the ads.


I was paying for the subscription but then they cancelled Google Music. Ad-free youtube was just a nice perk of that.

The replacement in YouTube Music premium* does not come with the bonus of no ads on youtube videos, which I think is some straight crap. I had forgot they existed, damn near.

*Unless there is another tier of subscription I haven't noticed.

Time to look into adblocker for my phone.


Nothing changed for me. I still have no ads on YouTube after my Play Music switched to YouTube Music.


Welp, that's weird. Time to do some digging I guess.


I think they actually have a support you can contact - https://support.google.com/youtube/gethelp?hl=en

Now that's weird.


No kidding! My biggest fear was that I'd be dealing with the Google Support Blackhole. Thanks so much for the link.


I have no problem with some ads. I have a problem with midroll ads every 5 minutes and ads >> 2 minutes long when I've stepped away from my device and can't skip.


YouTube premium is available in tons of countries and they have family plans. I’ve been using it for years with my wife and it’s best money ever spent.

Just pay for the content. You aren’t forced to watch those ads.


If you give Alphabet money directly, you’re just encouraging them.


To do what? Treat me more as a paying customer, and less as a product they resell to advertisers?

I’ll happily encourage them to do that.


What does that even mean? If you watch YouTube, you're just encouraging them.


Why not just pay for the service?


Because despite the common request to "let me pay a monthly fee to not see ads", the vast majority of people are too cheap to pay up. This is why ads are as prolific as they are.


Okay, but how is that relevant in this case, where you can pay to remove the ads, regardless of whether other people do?


Because people are too cheap to pay. I thought that was clear in my comment.


For me it's a bit of a Catch-22. I don't watch much YouTube content anyways, but I've reduced my consumption over the years because of the ads. From what I can tell, there's nothing I want to watch anymore because I no longer know what's there (and of value to me). So the prospect of paying is absurd for me as I'd be buying something with no real value except to remove an annoyance on the few occasions each month I bother to watch something on YouTube. If I had a clearer reason to increase my YouTube consumption, I'd entertain paying.

Other video services have clearer value to me in the content they provide so I pay for them. I suspect I'm not alone in this.


Yeah, If you are just watching videos rarely it can be tough to justify it.

I still have some channels that I regularly consume plus travel and cooking/baking videos that I watch a lot so it made sense for me to pay for it.


There is no free lunch for youtube either. Customers being less satisfied and whining about it on the internet is the cost of increasing the number of advertisements. If it wasn't, google would just put infinite adverts.


There is a market for infinite adverts. You remember ShopTV and other TV marketing channels streaming advertisements 24/7?


what makes you think you are entitled to using youtube for free? The ad-free experience in Premium is great.

And don't forget they are paying a huge sum to the content creators as well - it is a delicate balance.


I find it annoying that lots of content creators still put sponsored ads in their videos which are shown to me as a premium user. IMO those should be skipped automatically when Premium, but alas...


I don't think YT should interfere. As I see it, YT is a pipe for content. If you pay for it through ads/subscription you are paying for the pipe not just the content. The content creator should be free to monetize their videos as they choose to like TV channels can show ads for a TV show.


But I'm not just paying for the pipe. Part of my money already goes to content creators.


If things were set up correctly you'd expect the content creator to want to use YT's ads. They can be personalized to the user, can change over time, etc. The fact so many embed their own ads shows some failure in the system IMHO.


Demonetization has nearly killed any channel with a whiff of controversy or edgyness... The types of videos everyone wants to watch anyway.


I'm not why you expect YouTube to skip sponsorships which are directly integrated into the video...

Also, content creators do it because brand deals are generally a big chunk of change.


> I'm not why you expect YouTube to skip sponsorships which are directly integrated into the video...

As a user, I don't care how or why the ads appear - they're ads regardless.



Youtube is almost unusable without uBlock Origin or you have to call it Adstube.


Pay the $10 a month or whatever for Youtube premium and never see an ad again.


It's a decent deal if you also want the YT Music (Formerly Google Play Music) library, not a great deal otherwise.

(I do want the music library, so I've been a subscriber for a very long time.)


You can also get an ad free experience for about 3 dollars a month.


In the UK it is £12 a month for YouTube premium which is more like 15USD. Feels quite expensive when Netflix is about half of that.


How much is Spotify? YT Premium ~= YT Music + Ad free videos + YT Originals.


Isn't YouTube Premium $11.99 per month?


It’s a fixed number. So EU/UK people pay more. Same thing with games 60 dollars vs. 60 euros


A family plan is 15 for 6 people.


IMO they show you those annoying ads (two in a row recently) to make you subscribe to the ad-free premium service.


Check out YouTube Vanced, it's a YouTube app with all the advanced functionalities and no ads.

EDIT: https://vancedapp.com/


Can we please stop suggesting apps and extensions to circumvent these ads?

They offer a paid service, exactly what people on HN wanted. You are stealing from creators here.


Most creators make peanuts from these ads that Google insert everywhere. The real value is in sponsorships that I actually watch because it's part of the content.

I don't feel the need to pay 10$/month to watch LinusTechTips which is itself 20 minutes long advertisements for PC parts, sponsored by their respective manufacturers.


This whole thread is about google making $40B. They don't need your money. Keep it and give it to somebody who does.


I think you read the comment you're replying to incorrectly.

You are stealing from creators here


I don't want to avoid ads entirely - I still want to support creators and the success of the platform. It just seems as if the length, number, and frequency of ads has been ratcheted up to 200% lately.


Props to you for sticking to your principles. For what it is worth, I only started using it after the increase in ads.


So Google Cloud is still losing money. Anyone know if Azure is profitable?


At this stage of cloud, all that's really important is revenue growth. GCP is only a quarter of the size of Azure and AWS - they need to gain market share regardless of how much investment it requires in the short term.


Are the cloud losses all real or is it an accounting artifact due to internally providing services without charging for them in full?


GCP runs on Google, but Google doesn't run on GCP.


I don't think there's any major production Google service actually running on GCP (which, IMO, is a problem and likely one of the reasons for their trouble).


Internally Google has platforms that support easy reproducible builds, binary verification, secure deployment, etc. out of the box. Those don't exist for GCP (or, for that matter, other cloud platforms). That means you need a strong justification for GCP over borg.

Many acquisitions and Other Bets do end up on GCP after migrating from AWS/Azure, though.


Another way to look at it is that Google has a batteries-included opinionated way to deploy internal services, it would be an incredibly tough sell to off that more directly to other users. "First rewrite your app in one of these 4 languages" doesn't fly. People want to buy a VM, or maybe a Kubernetes cluster.

(Plus external services need stronger tenant isolation which Google internal services don't deliver)


The big question is, does Google consider gcloud so core that it will never give up on it? We are not there yet but it will only take the smallest whiff and Google's reputation for abandoning products will utterly destroy their viability in the enterprise cloud computing market.


It looks like Google Cloud made $13Bn and had expenses/losses of $5Bn i.e., net positive $8Bn. Why do you think it's losing money?


Google lost $5 billion, that's not it's expenses.


Ah got it, $5Bn is the 'operating income' so although they made $13Bn, they ended up spending $18Bn.


The comparisons between GCP and AWS are sobering. AWS booked $13.5 billion operating income on $45.4 billion revenue and is growing at 30% YoY.

GCP lost $5.6 billion on $13 billion in revenue. It’s growing a bit faster but not much considering the small base. The “we’re losing a ton of money because we’re growing” argument smells like the sort of thing unprofitable startups without a viable business model say. It looks really off when you’re competition is also growing super fast and is very profitable.


GCP doesn't need to beat AWS. It doesn't even need to increase market share, really: the cloud market as a whole is growing rapidly, and more money is more money, regardless of bragging rights. It just needs to get to profitability.

There's also a strategic aspect of clipping the wings of AWS by providing a BATNA in the big deal negotiations. With Amazon significantly cutting into Google's advertising market share, it needs another front to put pressure on its strongest competitor. If Google can prevent $10B in Amazon profits by burning $5B of its own money, that's arguably a win.


More money isn’t necessarily a good thing if you’re losing money to make it in the first place.


AWS launched compute and storage in 2006 and took until 2015 to first be profitable.

Google launched cloud compute in 2013 and arguably didn't take it seriously until the last few years. Growing nearly 50% is a great result, even if they're still a distant 3rd.


Google launched GAE in 2008 and GCS in 2010. GSuite ("Google Workspace") launched in 2006 and is also part of Cloud.

I think GCP is in a decent position with momentum today, but it's definitely playing catch-up after a near decade of missteps and fucking around.


>The comparisons between GCP and AWS are sobering. AWS booked $13.5 billion operating income on $45.4 billion revenue and is growing at 30% YoY.

yep, AWS spent 30B and got 45B, Google spent 18B and got 13B, that is 2X+ difference in bang-for-buck. And that is without full effect of Graviton2,3, etc. which provides like 1.5x leap in perf/price and perf/energy. With Google loosing that much money one can wonder whether the bean counters there would even risk investment in their own ARM platform and without it the GCP would lose to AWS completely.

It is pretty rare for a company to successfully move down the stack as the margins are typically lower there. The GCP numbers illustrate the case very well.



It's crazy that these companies can grow at this speed even though they are larger than any that existed historically. We're talking about multiple companies with market caps north of one trillion USD with double-digit growth and massive profit margins. We need to have a revamp of anti-trust regulations to break them up, because with their immense financial warchests and the protection of network effects, they are not going to face real competition from anyone. An economy made up of many smaller companies will not just create better outcomes for customers but also distribute wealth better. But right now, I don't get the sense that the competition mechanism works well against these giants.


I don't agree that an economy made out entirely of smaller players is strictly better. I think there pros and cons to each of these scenarios. For example one thing smallest companies cannot do is effectively tackle problems that take huge amounts of funding, engineering and coordination.


> It's crazy that these companies can grow at this speed even though they are larger than any that existed historically.

It's likely that the Dutch East India Company (VOC) was the largest company of all time in both inflation-adjusted terms (estimates made in 2017 put it between $7.9 and $8.2 trillion dollars) and in terms of % share of world domestic product.




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