Operating a modern public cloud is an enormously expensive undertaking. It looks like Google expanded its cloud computing capacity in a big way during its first quarter of the year, significantly increasing the amount it spent on a closely watched metric in the cloud computing world.
During its first quarter, Google spent $7.67 billion on capital expenditures, up over 200 percent from the $2.41 billion in spent in the same period a year ago and roughly double what it spend on capital expenditures in the fourth quarter of 2017. The company announced the new figures in reporting a 26 percent surge in overall revenue to $31 billion Monday afternoon.
Tracking capital expenditures as they directly relate to cloud spending is a little tricky; during a conference call after the release of the results, Google Chief Financial Officer Ruth Porat said a large portion of that increase was related to Google’s $2.4 billion purchase of the Chelsea Market building in New York during the first quarter, and that Google’s capital expenditures were split more or less equally between facilities and compute.
But it’s clear Google is ramping up its capacity as it hopes to gain ground on market leaders Amazon Web Services and Microsoft Azure. “The largest component of (the cap ex amount spent on computing) is for machines that incorporate the latest technologies, and we’re also investing in data center growth and increasing network capacity through undersea cables,” Porat said.
Google also called out its cloud spending in two other areas. The cloud accounted for one of its biggest advertising expenditures during the quarter, as Google Cloud branding was nearly ubiquitous during the NCAA men’s basketball tournament in March and April. And the second-largest increase in headcount spending during the quarter was for both technical and sales roles in its cloud group, many of whom are working in Seattle.
Google CEO Sundar Pichai declined to update the Google Cloud revenue numbers it disclosed for the first time last quarter, when it passed $1 billion in quarterly revenue including Google Cloud Platform and G Suite.