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Title: How Google Is Already Monetizing Its AI Services To Generate Revenue

Link: https://tech.slashdot.org/story/25/09/09/2118...

Google Cloud CEO Thomas Kurian revealed the company has already made billions
from AI by monetizing through consumption-based pricing, subscriptions, and
upselling. "Our backlog is now at $106 billion -- it is growing faster than
our revenue," said Kurian, speaking at the Goldman Sachs Communacopia and
Technology Conference in San Francisco. "More than 50% of it will convert to
revenue over the next two years." CNBC reports: Kurian said some people pay
Google by consumption, giving the example of AI infrastructure purchased by
enterprise customers. "Whether it's a GPU, TPU or a model, you pay by token --
 meaning you pay by what you use," he said. Tokens represent chunks of text
that a AI models process when they generate or interpret language. Some
people use customer service systems, paying for it by what Kurian called
"deflection rates." Such rates are priced based on the business value
customers get -- things like uptime, scalability, AI features and security.
Google Cloud also provides tools like a "deflection dashboard," that
customers can use to track and manage agent interactions. Last month, Google
won a $10 billion cloud contract from Meta spanning six years. Meta had
largely been reliant on Amazon Web Services for cloud infrastructure, though
it also uses Microsoft Azure. Some customers pay for cloud services by way of
subscriptions. "You pay per user per monthly fee -- for example, agents or
Workspace," said Kurian, referring to the company's Gemini products, which
has its own subscription tiers with various storage options, and the Google
Workspace productivity suite, which also has several subscription tiers.
Google One, a popular personal cloud storage subscription, offers a basic
monthly service to users for $1.99 a month. Earlier this year, the company
offered a new subscription tier called "Google AI Ultra," which offers
exclusive access to the company's most "cutting edge" AI products with 30
terabytes of storage for $249.99 per month. Kurian gave an example of Google
Cloud's cybersecurity subscription tiers, saying "we've seen huge growth in
that." Kurian said that upselling is another key aspect of Google Cloud's
strategy. "We also upsell people as they use more of it from one version to
another because we have higher quality models and higher-priced tiers,"
Kurian said. He said that once customers use Google's AI services, they wind
up using more of the company's products. "That leads customers who sign a
commitment or contract to spend more than they contacted for, which drives
more revenue growth," he added. Kurian says it is capturing new customers
more quickly too. "We've seen 28% sequential quarter-over-quarter growth in
new customer wins in the first half of the year," said Kurian, adding that
nearly two-thirds of customers already use Google Cloud's AI tools in a
meaningful way. "Selling to existing customers is always easier than selling
to new customers, so it helps us improve the cost of sales," Kurian said.

Read more of this story at Slashdot.

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