Alphabet, Google’s parent company, makes a lot of money in ads and search, however the majority of its other businesses either barely makes any money or actually loses money. And that is the case for its artificial intelligence division, Deepmind, which was acquired by Google (before Alphabet was formed) in 2014 for around $525 million. Google saw Deepmind and its AI research as an important tool for the future, and it couldn’t be more true. However all of this AI is coming at a price for Alphabet, as the division lost $162 million in 2016. This is according to information that the company filed with the UK government, which is required by law.
Last year, Deepmind generated around $52.7 million in revenue, and that was almost entirely for work it did for other companies under the Alphabet umbrella, and not for other companies. Breaking down its losses, the biggest loss was actually expenses for “staff costs and other related costs” which was around $137 million, which more than doubled from 2015. Of course, it’s legal fees also shot up quite a bit in 2016. To around $859K, from around $189K the year before. This all shows that artificial intelligence is proving to be pretty expensive for Google, and that’s largely because it’s spending a ton of money, but not actually making a lot of money in regards to artificial intelligence. Even though AI is being put into virtually all of its products.
Google’s CEO has said many times that artificial intelligence is going to be important for Google’s success in the future. And it has been using artificial intelligence in the majority of its products as of late. In fact, with the Pixel 2 that the company debuted earlier this week, it made a big deal about artificial intelligence and how it is being used in different aspects of the phone like the camera. It’s also being used in search and advertising, and even with the Google Assistant. So while Deepmind isn’t really making a ton of money right now, it is working to make the future of Google a success and really push its products even further. While Deepmind did lost $162 million last year, that was still a large amount compared to the $19 billion that Alphabet made in profit in 2016.