Google spent $917 million on infrastructure during the second quarter, continuing an upward trend that helps ensure new services like Google+ keep running. It’s the eight consecutive quarter of increased capital expenditures for Google, which is now spending at near-record levels after hitting a low of $139 million just two years ago.
Anybody who follows the web knows exactly why Google is spending like it is on data centers and other physical assets at this particular point in time. Everything Google does — from its App Engine cloud computing service to Google+ to its company-sustaining ad engine — requires lots of servers and a top-of-the-line network in order to run smoothly. Google can’t, or shouldn’t, compete with Facebook in the social realm and Microsoft in collaboration without leveraging the global infrastructure that’s the company’s greatest asset. Plus, as Google keeps apace with the growth of the mobile web and builds new services tailored to it, spending on infrastructure and innovations around that infrastructure are essential.
Even Dhanji Prasanna, an ex-Googler who famously derided the company’s once-lauded software as outdated, said its infrastructure is second to none.
Or, as Om put it in October:
It’s what allowed the company to innovate and outpace its rivals. It allowed the company to give us results faster than our broadband connections could offer, making us more subservient to its search in the process. …
One thing Google knows: It needs to keep spending money on this infrastructure in order to stay competitive and current.
In fact, I’d read Om’s post in its entirety for a great, in-depth explanation of why Google spends like it does on infrastructure. In its world, “you have to spend money to make money” is more than a cliché.