Google is moving parts of YouTube to its cloud service – CNBC

Sundar Pichai, Alphabet CEO

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Google is moving parts of its popular YouTube video service from the advertising company's internal data center infrastructure to the company's cloud service, the head of Google's cloud said.

The effort indicates Google is looking inward as it seeks to expand its share of the growing cloud-computing market and become less reliant on advertisements appearing on its web search engine and other properties.

Historically, Google has leaned on its own systems to run its most widely used applications across computer servers in its data centers. The Google Cloud Platform offering has coexisted separately, and Google has not undertaken the effort to migrate its eponymous search engine, for example, to the Google public cloud.

But the company's perspective on the value of having its top products use the cloud just like third-party applications has shifted.

"Part of evolving the cloud is having our own services use it more and more, and they are," Thomas Kurian, CEO of Google Cloud, told CNBC in an interview last month. "Parts of YouTube are moving to Google Cloud."

The change will bring Google more in line with its main U.S. competitors, Amazon and Microsoft.

In 2019 Amazon said its consumer business had turned off its final Oracle database in favor of databases from Amazon Web Services, after years of work. Microsoft has sought to make its LinkedIn social network and Minecraft video game more dependent on the company's own Azure public cloud.

The Google Workspace bundle of productivity apps formerly known as G Suite, the Waze navigation app and the DeepMind artificial intelligence research group all draw on Google cloud infrastructure, Kurian said.

YouTube is different. It's the second-largest website on the internet, according to Amazon's Alexa analytics tool, with more than 2 billion users each month. Google bought the property in 2006 for $1.65 billion.

Google's decision to consume public-cloud resources for YouTube and other consumer services might make life easier for the company's salespeople, who are constantly trying to persuade large companies to try building on the Google cloud or running existing applications on the Google Cloud Platform. Salespeople will be able to say the Google cloud is good enough for the company's business-critical workloads.

That, over time, could boost Google's cloud revenue. In the first quarter nearly 58% of Google parent Alphabet's revenue came from the Google Search and Other category, which includes advertising displayed on Google's web search engine, Gmail, Google Maps and other online destinations it operates. Google's cloud business, which includes the public cloud and Google Workspace, delivered 7% of revenue but grew faster.

The cloud unit has narrowed Alphabet's operating margin with billions in annual losses for at least three years, but the largest cloud infrastructure provider by revenue, Amazon Web Services, has become a key source of profit.

Google held 5% of the cloud infrastructure market in 2019, while Amazon had 45% and Microsoft had about 18%, according to technology industry research company Gartner. Gartner has not released more recent figures.

WATCH: Google Cloud's Thomas Kurian on the future of cloud and Google

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Google is moving parts of YouTube to its cloud service - CNBC