Google Cloud chief details how tech company is monetizing AI

Thomas Kurian, CEO of Google Cloud, speaks at a cloud computing conference held by the company in 2019.

Michael Short | Bloomberg | Getty Images

Google’s cloud chief Thomas Kurian on Tuesday explained how the tech giant is already monetizing its various artificial intelligence services to generate revenue.

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

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

“Our backlog is now at $106 billion — it is growing faster than our revenue,” he said. “More than 50% of it will convert to revenue over the next two years.”

During its most recent second quarter, Google parent Alphabet in July reported revenue of $13.62 billion for its cloud computing business, which was a 32% increase from the year prior. Alphabet’s net income increased to $28.20 billion, up nearly 20% from the previous year. While Google’s cloud unit lags Microsoft and Amazon’s cloud units, it’s growing faster than them.

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

Consumption

Kurian said some people pay Google by consumption, giving the example of AI infrastructure purchased by enterprise customers.

“Whether it’s a GPU, TPU or a model, you pay by token — meaning you pay by what you use,” he said. Tokens represent chunks of text that a AI models process when they generate or interpret language.

Some people use customer service systems, paying for it by what Kurian called “deflection rates.” Such rates are priced based on the business value customers get — things like uptime, scalability, AI features and security.

Google Cloud also provides tools like a “deflection dashboard,” that customers can use to track and manage agent interactions.

Last month, Google won a $10 billion cloud contract from Meta spanning six years. Meta had largely been reliant on Amazon Web Services for cloud infrastructure, though it also uses Microsoft Azure.