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Google's Moonshots Cost Lots of Money, but Running Google Costs Even More

Google's servers and real estate cost 2x what it spends on things like robot cars.


For years, Larry Page told Wall Street he wasn’t blowing all of Google’s money on crazy bets like self-driving cars and smart contact lenses.

Turns out, he was right.

If the first dual-structure Alphabet earnings showed us anything, it’s that the biggest costs for the Internet giant are not from its various non-Google projects. They’re from Google itself.

Case in point: In 2015, capital expenditure — servers, real estate and stuff like that — ran $8.85 billion for Google’s core business. Cap ex for the Alphabet remainder — from the self-driving cars to the Fiber broadband business to two biotech companies — was far less, at $869 million. Operating loss for those units was just north of $3 billion.

That is, Google spent more than twice as much on its basic ad business than on its change-the-world projects.

The reason? Running core Google is still expensive — particularly the massive data server infrastructure, which remains part of Google. So is its very large and very expensive research division, despite the fact that lots of that work, like its artificial intelligence and VR efforts, end up in other Alphabet projects, such as autonomous vehicles.

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