Google CEO Sundar Pichai
In early 2018, top executives at Alphabet debated whether the company should leave the public cloud business, but eventually set a goal of becoming a top-two player by 2023, according to a report from The Information on Tuesday.
If the company fails to achieve this goal, some staffers reportedly believe that Alphabet could withdraw from the market completely.
While Alphabet subsidiary Google is dominant in web search and advertising, the company is still a small player in cloud computing, which involves renting out computing and storage resources to other companies, schools and governments. In 2018 the company lagged Amazon, Microsoft and Alibaba in that market, according to industry research firm Gartner.
Alphabet doesn’t break out revenue for the Google cloud business but said in July that it had reached $8 billion in annualized revenue. Amazon Web Services, the market leader, generated $9 billion in revenue during the third quarter alone. Microsoft doesn’t specify revenue from its Azure cloud, but Griffin Securities analyst Jay Vleeschhouwer estimated that Azure delivered $4.3 billion in revenue in the third quarter.
Google co-founder Larry Page, who was Alphabet’s CEO at the time, reportedly thought being a distant third-place in cloud was not acceptable. But eventually he, CFO Ruth Porat, and then-Google CEO Sundar Pichai decided that Alphabet should remain in the cloud business, according to the report. The company set a five-year budget for capital expenditures of $20 billion, in part to reach that cloud goal.
The company replaced VMware co-founder Diane Greene, who had been leading the cloud business, with Oracle executive Thomas Kurian at the start of 2019. Pichai replaced Page as Alphabet’s CEO earlier this month.
Google didn’t immediately respond to a request for comment.