Google Banks Future at the Intersection of Search and Commerce

When Sundar Pichai became the CEO of Google in 2015, the search giant earned about $16 billion on roughly $75 billion in revenue.

After six years in the “captain’s seat,” the $1.9 trillion ship he’s piloting is not only 5-times bigger, but the parent company now known as Alphabet just banked $75 billion in net income on $257 billion in revenue for the year that ended Dec. 31.

“I just find the world of information is only continuing to grow and it’s getting increasingly multimodal in nature,” Pichai told analysts and investors who tuned in to the company’s Q4 and full-year webcast on Tuesday (Feb. 1), which was conveniently carried on its YouTube property.

“Just like we took the leap from text to images, thinking through video, audio, incorporating it and then providing it back to users, regardless of whether they’re typing, speaking or looking at something and wanting an answer,” Pichai postulated, “that’s the journey between AI and search and we’ll continue doing that.”

Head in the Cloud

If all that sounds a little “out there,” it might be because Google —  like rival Microsoft — is literally spending more time than ever with its’ head in the cloud’ so to speak, the remote computing division that just saw surging demand for corporate IT upgrades and digital connectivity push unit revenues up 45% for the quarter and boosts its order backlog to the equivalent of 2.5 years.

“We saw over 80% growth in total deal volume for Google Cloud Platform and over 65% growth in the number of deals over $1 billion,” Pichai said, of the small, but faster-growing side of the Alphabet empire. The other side of the franchise, the vaguely named Google Services bucket, which is 12 times larger than Cloud and contains everything from ads to Android, to Chrome, Maps, Play, Search and YouTube, set its own record, with Q4 revenues up 31% to more than $69 billion.

Of particular interest for the holiday season quarter was the emerging integration of search, ads and location, with the company pointing out that map-assisted queries for “gifts near me” rose 70%, as consumers increasingly wanted to know if the item they were seeking was in-stock at a local store and selling at a good price.

“I’ve said it before and I’ll say it again; The future of retail is omnichannel,” Chief Business Office Philipp Schindler said on the call, while expressing plans to further invest in new features and next-gen experiences that benefit merchants and shoppers.

“People increasingly want to know what’s available nearby before they get to the store,” Schindler added.

In short, whether it’s live-streamed shopping events with brands like Walmart and Target or the increasing insertion of product feeds in global video campaigns, Google’s retail offering still has plenty of room to grow, especially at its new but fast-growing answer to TikTok, YouTube Shorts.

“Again, it’s early but I find the opportunity in this space pretty broad and exciting,” he said.

An Eye on Washington

To be sure, there were plenty of moments where Google took a victory lap, be that for its role in supporting the economic recovery around the world or the fact that nearly a third of small business owners said that without digital tools they would have had to close their business during the pandemic.

That said, the success and ubiquity of Google and its many brands and services are, of course, the very reason that it is facing antitrust regulatory probes in the U.S. and abroad.

While Pichai said Google has always been constructive and open to “sensible updated regulations” that don’t hinder technology’s societal benefits, the company is clearly on guard.

“There are areas where we are genuinely concerned that they (regulators) could break a wide range of popular services we offer to our users,” the 49-year-old CEO said without offering specifics. Not only is American competitiveness at risk due to disadvantaging U.S. companies, but Pichai said unintended consequences pose a threat too.

“We are very worried about the impact on small business and local retailers as well as on their customers as well,” Pichai said, “But having said that, we are committed to approaching it constructively … in a way that’s beneficial for society. So, we’ll urge Congress to take time to consider unintended consequences, and I think we’ll remain focused on building great products for our users.”

See also: Lawsuit Says Google Pays Apple to Keep Away From Internet Search Market