Thomas Kurian, who took over Google’s growing cloud business last year, isn’t concerned about regulators hampering his ability to expand, even as the Justice Department investigates the parent company for potential anti-competitive behavior.
“They’re different businesses,” Kurian told CNBC’s Josh Lipton in an interview this week. “There’s a business in the consumer space. There’s business in the enterprise space. The cloud business [is] really in the enterprise space.”
Google’s advertising revenue increased 16% in the second quarter to $32.6 billion, representing about 84% of Alphabet’s overall sales. In digital advertising, Google has a commanding position, with research firm eMarketer estimating that it controlled more than 38% of the market in 2018, making it by far the largest player.
However, in public cloud, where big tech companies provide infrastructure so that customers can offload their computing and storage needs, Google is way behind Amazon Web Services and Microsoft Azure. The cloud business, which includes cloud hosting and Google’s G Suite portfolio of productivity apps, is generating annualized revenue of over $8 billion, up from $4 billion less than two years earlier. Gartner’s most recent data show that Google controls 4% of the public cloud market and 10% of the office suite market.
Regulators are clearly more concerned about Google’s growth in advertising, where the company has the potential to use its ownership of the Android operating system, Chrome browser and dominant search engine to collect vast amounts of consumer data and control what users see. Last week, Alphabet confirmed that it’s being investigated by the DOJ. And on Monday, Texas Attorney General Ken Paxton announced that 50 attorneys general have joined an investigation into Google over possible antitrust violations.
Working with Mayo Clinic
Kurian’s biggest deal so far was the $2.6 billion acquisition of data analytics company Looker in June.
Kurian, a longtime Oracle executive who replaced former VMware CEO Diane Greene as the head of Google’s cloud, spoke with CNBC specifically to discuss a partnership with the Mayo Clinic. On Tuesday, Google said the nonprofit medical center with facilities in Arizona, Florida and Minnesota chose Google as its primary public cloud vendor in a 10-year deal. Terms weren’t disclosed.
Kurian said that while Amazon and Microsoft are “fine companies,” Google has certain advantages, like in artificial intelligence and data analytics. It’s his job to build up the sales organization so it can support large enterprises while also landing flagship customers that can help him promote the technology.
“We have the world’s best information management and analytics platform,” Kurian said. “We have material advantages in how AI algorithms can be built on top of data.”
Cris Ross, the Mayo Clinic’s chief information officer, said he was impressed with Google’s efforts to add industry-specific cloud tools for analyzing data, though he said the organization will have “at least some small footprint with other cloud providers.”
Prior to Kurian’s arrival at Google, the company faced internal controversy over some of its work with the U.S. government. Last year, Google employees protested a partnership with the Pentagon called Project Maven, which involved developing AI surveillance tools to analyze drone footage. The company told employees in June that it would not renew that contract and Google later dropped out of the competition for a different Pentagon cloud contract that could be worth $10 billion, saying it may conflict with the company’s values.
More recently, Google has taken heat for its decision to back away from working with the government, with investor and Facebook board member Peter Thiel and venture capitalist and Palantir co-founder Joe Lonsdale slamming the company for acting against U.S. interests.
Kurian defended Google, saying it has big contracts with the state of Arizona, the city of Memphis, Tennessee, and a cyberdefense project with New York City.
“We have tripled our public sector sales force this year, just as an example, because of the demand we see from our public sector customers,” Kurian said. “We are very committed to working with the U.S. government. And we have many, many projects and many people at Google working with them.”