CNBC reports the company is eliminating fewer than 50 positions despite financial gains in 2019
Google Cloud reportedly is eliminating a handful of jobs as part of an internal organizational restructuring at the world’s third-largest public cloud service provider.
The Lowdown: The restructuring, first reported by the Wall Street Journal and CNBC, comes after parent company Alphabet for the first time broke out the financial numbers for its cloud business, showing that it generated more than $8.9 billion in revenue and hit an annual run rate of more than $10 billion in 2019.
The Details: Google Cloud officials reportedly declined to say how many jobs were being cut, but CNBC, citing an unnamed source, put the number at fewer than 50, adding that the company was trying to find other roles within the company for those employees affected.
The news of the restructuring came the same week CEO Thomas Kurian at a Goldman Sachs event spoke about Google Cloud’s strategy going forward, which includes focusing on five specific industries – retail, health care, financial services, media and entertainment, and industrial and manufacturing – growing its direct-sales business, and expanding its reliance on the channel, including VARs, regional and global systems integrators, MSPs, and solution providers.
The Impact: Google Cloud continues to try to gain ground on public cloud provider leaders Amazon Web Services (AWS) – which owns almost 40% of the market – and Microsoft Azure. Kurian, a longtime Oracle executive, was brought in more than a year ago to drive Google’s growth in the cloud and has focused on such areas as expanding Google Cloud’s enterprise customer base and leveraging its capabilities in artificial intelligence (AI) and machine learning.
Background: Despite various challenges in a crowded and highly competitive market, Google Cloud is making gains. In his presentation at Goldman Sachs, Kurian noted that the business’ revenue in 2019 jumped 53% over the previous year’s and that during the same time frame, the number of deals of more than $50 million doubled.
That said, the company has a way to go before it catches AWS and Azure. In the fourth quarter, Google Cloud said it generated $2.6 billion in revenue, but AWS, in the same quarter, collected almost $10 billion in revenue with a run rate of $40 billion, while Microsoft put its cloud revenue at $12.5 billion, with a $50 billion annual run rate.
The Buzz: “We recently communicated organizational changes to a handful of teams that will improve how we market, partner, and engage with customers in every industry around the globe,” a company spokesperson said in an email to CNBC. “We made the difficult but necessary decision to notify a small number of employees that their roles will be eliminated.”