Google Cloud Chief details how tech companies monetize AI

Google’s Cloud Chief Thomaschlian explained on Tuesday whether the tech giant is already monetizing various artificial intelligence services to make money.

“We’ve already made billions using AI,” Kurian said at the Goldman Sachs Communism and Technology Conference in San Francisco.

Kurian said Google Cloud’s customer demand backlog is growing faster than revenue.

“Our backlog is now $106 billion, growing faster than revenue,” he said. “Over 50% of that will be converted into revenue over the next two years.”

In its most recent second quarter, Google Parent Alphabet reported revenue of $13.62 billion in July for its cloud computing business. This is an increase of 32% from the previous year. Alphabet’s net profit rose to $28.2 billion, nearly 20% from the previous year. Google’s cloud units are lagging behind Microsoft and Amazon’s cloud units, but are growing faster than them.

Here’s what Kurian said about how Google Cloud monetizes AI:

Kurian says that some people pay Google by consumption, giving examples of AI infrastructure purchased by enterprise customers.

“Whether it’s a GPU, a TPU, or a model, you pay with tokens, which means you pay with what you use,” he said. A token represents a chunk of text that the AI ​​model processes when generating or interpreting a language.

Some people use a customer service system and pay it by what Kurian calls the “deflection rate.” These fees are priced based on the business value that customers get – uptime, scalability, AI capabilities, security, and more.

Google Cloud also offers tools such as the Dedlection Dashboard that customers can use to track and manage agent interactions.

Last month, Google won a $10 billion cloud deal Meta Six years. Meta also uses Microsoft Azure, but relied heavily on Amazon Web Services at Cloud Infrastructure.

Some customers pay for the cloud service through subscriptions.

“Payment per user per month per fee – agents, workspaces, etc.” says Kurian, who has Gemini products from a company with its own subscription tier with a variety of storage options, and Google Workspace productivity suite with several subscription tiers.

A popular personal cloud storage subscription, Google One offers users basic monthly services for $1.99 per month. Earlier this year, the company offered a new subscription tier called “Google AI Ultra.” It offers exclusive access to the company’s most “front-of-the-art” AI products, with 30 terabytes of storage for $249.99 a month.

Kurian cites an example of the cybersecurity subscription tier for Google Cloud, saying, “We saw great growth in it.”

Kurian said upselling is another important aspect of Google Cloud’s strategy.

“We have a high quality model and a high priced tier, so we climb people to use more from one version to another,” Kurian said.

He said that when customers use Google’s AI services, they use more companies’ products.

“This will guide customers who sign commitments and contracts to spend more money than they contacted, increasing revenue growth,” he added.

Kurian says he’s also getting new customers more quickly.

“In the first half of the year, we saw quarterly growth in 28% with new customer wins,” Kurian said, adding that nearly two-thirds of our customers are already using Google Cloud’s AI tools in meaningful ways.

“Selling to existing customers is always easier than selling to new customers, so it helps to improve sales costs,” Kurian says.

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