24/7 Insights

• Sometimes, the news about a company is not news at all.
• This is true of the Google cloud business layoffs.

One of the absurd things the media does is look at layoffs and assume they mean something special beyond saving a company money. That happened recently at Google, the search arm of tech giant Alphabet Inc. (NASDAQ: GOOGL).

There were dozens of headlines that Google had laid off 100 or so people in its cloud business. CNBC reported, “The latest downsizing comes as Google cuts jobs across the company to prioritize artificial intelligence.” But does a 100-employee layoff deserve this headline across the media? No. People who look at it as a sign of a change in strategy are naive.

Google’s cloud business is among its most significant and most profitable. Some of Alphabet’s revenue comes from artificial intelligence (AI) applications that are part of these cloud operations. Last quarter, cloud revenue rose 28% to $9.57 billion. Operating income for the business hit almost $1 billion.

Even if the AI business grows quickly, cloud computing will significantly contribute to revenue for years. This is not just true at Alphabet. It is true at Amazon.com Inc. (NASDAQ: AMZN), the cloud industry leader through its AWS divisions, and Microsoft Corp. (NASDAQ: MSFT) with its Azure cloud business.

Sometimes, the news about a company is not news at all. The media is chasing a story that is not there. This is true of the Google cloud layoffs.

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