Cloud: Google believes that Microsoft Azure is losing more money than the market would like to believe

In the ultra-competitive cloud market, the battle for numbers rages on. In this little game, Google does not seem satisfied with the calculations of the analysts regarding one of its opponents. The search giant brought out its calculator based on a presentation revealed by Business Insiderwith extensive financial data regarding Azure, Microsoft’s cloud platform.

Based on its own calculations, Google concludes that it generated less than $29 billion in its last fiscal year (which ended June 30), reveals CNBC. A number far below Wall Street’s estimates. For example, Bank of America expected $37.5 billion, while investment bank Cowen expected $33.9 billion in revenue and UBS $32.5 billion.

Big operating losses in 2022, according to Google

In detail, Google’s estimate results in an operating loss of nearly $3 billion for Azure by the end of fiscal year 2022, compared to more than $5 billion the previous year. The US giant also claims that Azure’s sales and marketing costs approached $10 billion, or 34% of its revenue. At the same time, Microsoft said that these costs accounted for only 11% of its cloud platform’s revenue in the same period.

For Derrick Wood, analyst at Cowen, Google is far from the account. “There’s no way, it’s such a big loss”He told CNBC. According to his research, Azure has an operating margin of over 30%, which is negative (-10%) according to Google. This estimate is not the result of coincidence, since the operating margin of the cloud division of the Alphabet subsidiary came out at a similar level at the end of the third quarter, where Amazon Web Services (AWS), the world leader, is at about 26%.

According to data from Gartner, AWS controls 39% of the global market ahead of Microsoft (21%), Alibaba (9.5%) and Google (7.1%). However, if the internal estimate of the Mountain View company turns out to be correct, it means that it is not very far from the second place in the market, which is currently occupied by Microsoft. Difficult to distinguish the true from the false, while the American giants do not provide precise information about the performance of their cloud platform.

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