Alphabet’s Playbook Includes Pumping Billions Into Networking, AI

Google’s parent company Alphabet is pumping billions of dollars into its networking strategy as it works to build — and own — the artificial intelligence (AI) ecosystem, according to MTN Consulting’s Alphabet Playbook. This report is the third in the consulting firm’s Webscale Playbook series, covering the “Super 8” webscale network operators: Alibaba, Alphabet, Amazon, Apple, Baidu, Facebook, Microsoft, and Tencent. It looks at Alphabet’s quarterly earnings and spending priorities, as well as the company’s networking strategy and disruptive impact on the network infrastructure market. Alphabet has recently been spending more on capex than research and development as it builds data centers, submarine cables, and other network infrastructure, the report says. Networking Spend For example, in February 2018, Google announced a $2.5 billion investment for 2018 alone to expand or open new data centers across the U.S. It also opened three new data centers in Switzerland and is spending $140 million on facilities in Chile. And in July 2018, Google Cloud announced plans to build its second intercontinental subsea cable network slated to go live in 2020. These activities — along with its $2.4 billion Chelsea Market deal to expand its New York campus — boosted the company’s capex spend, which peaked in the third quarter of 2018 at 17.2 percent of revenues.