Sundar Pichai
Chief Executive Officer and Director at Alphabet
Hello, everyone. Our results reflect strong momentum and product innovation, continuing into 2024. Today, I'm going to talk about four main topics. One, our investments in AI including how it's helping Search. Two, subscriptions, which reached $15 billion annual revenue, up 5 times since 2019. Subscriptions is growing strongly powered by YouTube Premium and Music, YouTube TV and Google One. Three, Cloud, which crossed $9 billion in revenues this quarter and saw accelerated growth driven by our GenAI and product leadership. And four, our investments and focus to meet the growth opportunities ahead.
First, AI and Search. As you know, we have long led the way in using AI to improve many of our products from search to ads to most of our consumer and enterprise products, helping billions of people already. Last year brought new excitement around GenAI and I'm proud of how we responded responsibly with deep advances and foundation models and a number of great launches.
We closed the year by launching the Gemini era, a new industry leading series of models that will fuel the next generation of advances. Gemini is the first realization of the vision we had when we formed Google DeepMind, bringing together our two world class research teams. It's engineered to understand and combine text, images, audio, video and code in a natively multimodal way, and it can run on everything from mobile devices to data centers. Gemini gives us a great foundation. It's already demonstrating state-of-the-art capabilities, and it's only going to get better.
Gemini Ultra is coming soon. The team is already working on the next versions and bringing it to our products. That starts with Search. We are already experimenting with Gemini in Search, where it's making our Search Generative Experience or SGE, faster for users. We have seen a 40% reduction in latency in English in the U.S. I'm happy with what we are seeing in the earliest days of SGE. It's available through search labs in seven languages. By applying generative AI to Search, we are able to serve a wider range of information needs and answer new types of questions, including those that benefit from multiple perspectives. People are finding it particularly useful for more complex questions like comparisons or longer queries. It's also helpful in areas where people are looking for deeper understanding, such as education or even gift ideas.
We are improving satisfaction, including answers for more conversational and intricate queries. As I mentioned earlier, we are surfacing more links with SGE and linking to a wider range of sources on the results page, and will continue to prioritize approaches that add value for our users and send valuable traffic to publishers.
Beyond SGE, we are continuing to use AI to make searching more accessible and intuitive. Circle to Search, lets you search what you see on Android phones with a simple gesture without switching apps. It's available starting this week on Pixel 8 and Pixel 8 Pro, and the new Samsung Galaxy S24 series. And Lens now offers generative AI overviews. You can add text to a visual search to ask questions about anything you see and get AI-powered insights in the moment. In addition to Search, we are also seeing a lot of interest in our AI-powered solutions for advertisers. That includes our new conversational experience that uses Gemini to accelerate the creation of search campaigns.
Then there is Bard, our conversational AI tool that complements Search. It's now powered by Gemini Pro and is much more capable at things like understanding, summarizing, reasoning, coding and planning. It's now in over 40 languages and over 230 countries around the world. Looking ahead, we'll be rolling out an even more advanced version for subscribers powered by Gemini Ultra. That's a good segue to subscriptions.
As I said earlier, it's now a $15 billion business annually. YouTube is the key driver of our subscription revenues. Available in over 100 countries and regions, YouTube Music and Premium have real momentum. They're engaging passionate users and driving great returns for the music industry and creators. YouTube TV is also doing well. We've had great consumer feedback on the viewing experience. People love the navigation, multiview and unlimited DVR. NFL Sunday ticket has found its perfect home on YouTube, and Philip will talk about that more.
Let me also talk about our subscription service, Google One. It's doing incredibly well with strong user growth. It provides expanded storage, unlocks exclusive features in Google products, and allows us to build a strong relationship with our most engaged users. Google One is growing very well and we are just about to cross 100 million subscribers. From here, we are going to bring in more AI features and look forward to more strong growth to come.
Next, Google Cloud. Throughout 2023, we introduced thousands of product advances, including broad GenAI capabilities across our AI infrastructure, our Vertex AI platform and our new Duet AI agents. In Q4, our product and GenAI leadership enabled us to win and expand relationships with many leading brands, including Hugging Face, McDonald's, Motorola Mobility, and Verizon. Google Cloud offers our AI hypercomputer, a groundbreaking supercomputing architecture that combines our powerful TPUs and GPUs, AI software, and multi-slice and multi-host technology to provide performance and cost advantages for training and serving models. Customers like Anthropic, Character.AI, Essential AI, and Mistral AI are building and serving models on it.
For developers building GenAI applications, we offer Vertex AI a comprehensive enterprise AI platform. It helps customers like Deutsche Telecom and Moody's discover, customize, augment and deploy over 130 GenAI models, including PaLM, Med-PaLM, Sec-PaLM and Gemini, as well as popular open source and partner models. Vertex AI has seen strong adoption, with the API requests increasing nearly 6 times from H1 to H2 last year. Using Vertex AI, Samsung recently announced its Galaxy S24 series smartphone with Gemini, and Imagen 2 are advanced text-to-image model.
Shutterstock has added Imagen 2 to their AI image generator, enabling users to turn simple text prompts into unique visuals. And Victoria's Secret & Company will look to personalize and improve the customer experience with Gemini, Vertex AI Search and Conversations. Customers are increasingly choosing Duet AI, our packaged AI agents for Google Workspace and Google Cloud platform, to boost productivity and improve their operations. Since its launch, thousands of companies and more than a million trusted testers have used Duet AI, it'll incorporate Gemini soon.
In Workspace, Duet AI is helping employees benefit from improved productivity and creativity at thousands of paying customers around the world, including Singapore Post, Uber and Woolworths.
In Google Cloud platform, Duet AI assists software developers and cybersecurity analysts Duet AI for developers is the only GenAI offering to support the complete development and operations cycle, fine-tuned with a customer's own code, corpus and policies. It's helping Wayfair, GE Appliances and Commerce Bank write better software faster with AI code completion, code generation and chat support. With Duet AI and security operations, we are helping cybersecurity teams at Fiserv, Spotify and Pfizer.
Our robust growth has been driven by strong direct and indirect channels. With ISVs, we have nearly tripled the number of cosell deals from 2022 to 2023. In our ecosystem, there are nearly 90,000 Google Cloud, GenAI enabled consultants; and Accenture has teamed up with Google Cloud to create a joint generative AI Center of Excellence.
Next, let me turn to our focus and discipline as we pursue the opportunities ahead. Search, YouTube and Cloud are supported by our state-of-the-art compute infrastructure. This infrastructure is also key to realizing our big AI ambitions. It's a major differentiator for us. We continue to invest responsibly in our data centers and compute to support this new wave of growth in AI-powered services for us and for our customers. Through this, we are being disciplined in how we run the company.
You've heard me talk about our efforts to durably reengineer our cost base and to improve our velocity and efficiency, that work continues. Teams are working to focus on key priorities and execute fast, removing layers and simplifying their organizational structures. As just one example, our Devices team has brought together different teams from across Nest, Fitbit and other teams into a new functional structure. This will help us pool resources and drive progress across our Pixel portfolio.
Across different teams, we have wound down some non-priority projects, which will help us invest and operate well in our growth areas. We are also improving our machine utilization, building on our years of experience and driving cost efficiencies in our computing infrastructure and operations. And through our supplier efficiency efforts and automation of certain processes, we have made major improvements in areas like procurement, achieving significant savings. That's a snapshot of the quarter.
Before I close, a couple of other highlights. Pixel 8, our AI-first phone was awarded "Phone of the Year" by numerous outlets. It now uses Gemini Nano with features like Magic Compose for Google messages and more to come. In our Other Bets, portfolio of companies, Waymo, which is deeply focused on safety, reached over 1 million fully autonomous ride-hailing trips and isomorphic labs entered into strategic partnerships with Eli Lilly and Novartis to apply AI to treat diseases, which has great potential.
2023 was a year of profound innovation and product momentum. Thank you to our many partners. We succeed when our partners do and we are grateful for the work we do together. From our partners across the Android ecosystem who are on display at CES, to our deep relationships with retailers, small businesses and advertising partners, to the next generation of AI startups and developers, and many more. I also want to thank all of our employees for their hard work throughout 2023 and the start of the new year. I'm excited for what's ahead in 2024.
Philipp.
