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Google DeepMind can predict almost exactly where and when it’s going to rain, but for years the artificial intelligence company hasn’t figured out how to stop going into debt.

On Tuesday, however, DeepMind said it has now made a profit. ultimately: hope for all brave little startups with the backing of a $ 1.7 trillion parent company.

Artificial brain drain

DeepMind, which is arguably the largest AI research operation in the world, has a very unique revenue model: it makes 100% of its money selling the technologies it develops to other Alphabet subsidiaries, the parent company of Google.

But while Alphabet generated $ 182.5 billion in revenue last year, DeepMind has been hemorrhaging money for years, losing more in 2018 and 2019 (roughly $ 680 million each year) than Google does. paid it in 2014 ($ 545 million). Alphabet also forgave $ 1.5 billion of DeepMind’s debt in 2019.

So what has changed?

  • Tuesday, DeepMind say it made a pre-tax profit of $ 63 million in 2020, mainly because revenue more than tripled to $ 1.1 billion.
  • These revenues are on the rise as the expensive research of DeepMind begins to find practical applications. Like a Google Maps collaboration that used AI to improve arrival times on the service by 50%. And a feature on Google’s Android Pie phone operating system that uses DeepMind technology to save battery power.

Big Brains, Big Bucks: The costs of DeepMind are incredibly high because the big tech companies are engaged in an all-out war to hire the best human minds in AI, which is still a relatively nascent field but could transform everything. In 2020, DeepMind’s personnel costs were $ 1 billion, up from around $ 977 million in 2020.

Corleone Silicon: Google, Facebook, Amazon and Microsoft have all reportedly poached tenured university professors by offering them up to 10 times their college salary – an offer few turn down.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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