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Google Spent Much More on its Ad Business than Moonshots, in 2015

February 1, 2016 - Written By Alexander Maxham

Analysts and investors, as normal, have been questioning Alphabet’s CEO and Google Co-Founder, Larry Page about spending all of Google’s money on moonshots like Google Fiber, Project Loon and other projects. As many of us know, Google’s core business, and more than 90% of their revenue comes from ads. And that hasn’t changed. Now that Alphabet is releasing dual-structured earnings reports, we can see how much Google is making and spending versus the moonshots which are listed under “Other Bets”. And when Larry Page told Wall Street that he wasn’t spending all of Google’s cash on moonshots, he was right.

Last year, capital expenditures for Google was $8.85 billion. Those capital expenditures include things like buying and up-keeping servers, real estate and other expenses that are required to keep Google’s core business going strong. While Capital Expenditures for the rest of the company was $869 million, with operating loss of “Other Bets” being around $3.6 billion.

As you’d expect, running Google is still pretty pricey, especially with all of the products that are part of Google these days. Keeping up their server infrastructure is not cheap, as we can see in their quarterly results. Not to mention Google has data centers and servers located all around the world, and in many countries they have multiple data centers in different parts of the country.

Alphabet put up some great numbers today in their earnings report. Also added some transparency to the company, as many thought that Google was spending money on these moonshots that weren’t really helping the company. Actually they thought they were doing more harm than good. Alphabet actually beat Wall Street expectations and reported $21.3 billion in revenue for the quarter. A big majority of that came from Google and its core ad business, as you’d expect.

While Google are investing in moonshots like X, Calico and many other things, it may look like they are losing money on those projects, but they are still doing just fine. As they are spending much, much more on keeping their ad business afloat and growing it as well. Alphabet also surpassed Apple to become the most valuable company in the world as of these earnings results.