We Finally Know How Much Google Is Losing On Its Wild Ideas

We Finally Know How Much Google Is Losing on Its Crazy Ideas

Google, AKA Alphabet, is famous for its "moonshots" — enormous, ambitious technology projects that cost a ton to develop and might not ever work or turn a profit. Today, we're getting a first look at just how much money the company is flushing on its big ideas. Alphabet encompasses the many different little businesses we used to know collectively as Google. After last winter's reorganisation, Google refers only to the company's hugely lucrative internet business. Everything else gets its own little corner in the company. The bottom line is that moonshots and other ambitious projects like Google Fibre, delivery drones, autonomous cars and Nest don't make any money.

In today's Alphabet earnings report, the company for the first time broke down its finances into both Google revenues, and revenues from a new category called "Other bets". Other bets includes basically everything else. No surprises: Google makes a load of money, and the other bets bleed cash:

We Finally Know How Much Google Is Losing on Its Crazy Ideas

So "other bets" is $US3.5 billion in the red. Ouch. Nevertheless, the company is still ridiculously profitable even with that huge loss. The other interesting point to note is that Google nearly doubled its operating loss on other bets in just 12 months. We don't know just what that money's going to, but it's a big jump. Hopefully that means some of those crazy ideas are inching closer to reality.

Illustration by Sam Woolley


Comments

    Reads like an accountant wrote this article.

    All that money could've been better spent else where. I understand that Google likes to renovate and come up with better ideas to help the people and the globe. But why not spend it in where it needs to be spent....

      Such as? They are business, not a charity.

      If their driver less car gets off the ground and Into the mainstream. The amount of lives that could potentially be saved from eliminating car accidents is impressive.

        I doubt driver-less cars or google glass ill ever make money. Not only is there the issue of getting the tech to work seamlessly without having to actually keep one foot on the break or roads painted correctly or awkward eye movements (glass)..there is always the legislation to overcome. No politician or public bureaucrat would ever put their signature to paper when there is potential lives at risk (cars crashing or security breeches (glass).

        Having said that RandD is important and it is more likely that there is some vital piece of tech that comes out of one of these moon shots that can be used to solve another problem. For example, Apple had developed touch screen technologies in their own labs but did not use this tech until they realized they would be great in a music player and so out came the iPod Touch (merging of iPod and touch screens)..

          Driverless vehicles are out and in the world as we speak. They are becoming smarter, more ubiquitous and will no doubt take over driving within the next decade or two.

          There's a lot of reading for you to do!

          So no politician would *ever* back legislation to allow driverless cars on the road?
          https://en.wikipedia.org/wiki/Autonomous_car#Legislation

      Random guy on internet thinks he has more insights into corporate strategy than executives of half trillion dollar corporation.

      Quick, better shoot them an email! I can't believe they managed to get this far without your insightful 'they should spend money where it needs to be spent' flash of genius. I am sure they will reward you most handsomely, Sun Tzu.

        It was just a personal point of view wise ass. Everyone has their own views and opinions.....

          But you should clarify what exactly you mean by "better spent elsewhere". When companies spend money on RandD they create jobs and those jobs create other jobs because they have money to spend and they also create taxes which also leads to government spending and even more jobs. If Google (and Apple and MS and Facebook) want to blow billions of dollars on RandD then good luck to them and better for everyone else. who can now be employed either directly or indirectly. I only would like to ensure that these companies spend RandD in the markets that they get the money from and not blow it all in countries like China.

      I hope google renovates my place, that would be awesome.

        They would collect all sorts of information about you and sell it to their advertisers. EG how much time you spend in the toilet/

          It would be very disturbing, if they actually do that....

      Glad you don't run a drug company.

      Scientist "We have some promising leads on a drug that will cure the common cold forever. Research and trials are estimated to cost 5 million dollars"

      Infiltrator "That sounds like a bit much, we'll never make that back. NEXT"

      Google is spending their money wisely, Investing in start ups and technologies that could be great for our society.

    Where's the news? The r&d arm of a company like this isn't about making money on the work they do this year, it's about 10, 20, 50 years down the track if at all but someone needs to do the pure research and governments and uni's just can't do it all any more.

      I think the news was that Google is still not making anything meaningful beyond Google search and Ad-clicks. Before Alphabet it was easier to hide the losses.

    Today, we’re getting a first look at just how much money the company is flushing on its big ideas.Google is one of the few companies in the world that are willing to take the risk. This is how they make money in the long term, not flush it! Now if we could get our Government to just follow suit, we'd be much better off in the long term too.

      I really hope they keep doing this and developing and advancing technology. It's not something that many other companies are doing due to the constant push for more profits.

      Except that our govt is stupid

        Can't disagree but in America corporations have a greater right to screw over people than in other countries. This is why US companies tend to do more RandD and take bigger risks - because the company laws are employee laws are out of whack. Other western countries have better social values than in America and the last thing those countries need is for companies to win greater influence and push for things like lowering the min. wage or making it easier to unfairly dismiss employees or allowing protesters to be arrested for economic terrorism simply for protesting against a company and affecting their sales. America has a much better environment for companies to take risks but the rights of the citizen is diminished as a result.

    i see this as Googles r&d isnt just content with being google, they also want to be the "next Google"
    Google was a financial risk that payed off, and they are using a small part of their MASSIVE income to fund other financial risks that may pay off.

    From a different perspective, we finally know how much google is spending on job creation both internally and externally.

      Google was not originally much of a financial risk, not to the scale you imply. It was a very small financial risk for a couple of MIT students and some financial backers. There were lots of search engines (and still are) that started off the same way as Google. Google struck gold once they realised that they could make advertising dollars by using search results to return ads. They are smart enough to realise that the money they have is better spend on RandD and hoping to strike it lucky on some other product beyond search and adwords.

      I think a lot of it is Google's employment strategy.
      To attract and keep impressive brains, Google let those brains spend some time and cash pursuing projects of personal interest.
      I suspect that the possibility that some results may be useful is viewed as a desirable side-effect.

    i implied it was a risk to begin with, the scale wasn't part of my point and is largely irrelevant as my point is the act of taking a risk. You've for the most part retyped my comment back to me.

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