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Power

Cloud computing was a bright spot during the worst quarter in US history

Cloud providers weren't immune from the larger economic pressures that loom over 2020, but they've weathered the storm and are well-positioned for a recovery.

Data center

Assuming you can see past the current state of the U.S. economy, there is one prominent signal that the big cloud vendors still very much believe in the long-term growth potential of the cloud: capital expenditures.

Photo: Manuel Geissinger/Pexels

In what's now been declared the worst economic quarter in modern U.S. history, the worst thing you can say about the performance of the cloud computing giants is that revenue growth slowed a tad.

After Microsoft reported strong but slowing growth for its Azure infrastructure service last week, Amazon and Google weighed in Thursday afternoon with similar earnings results that indicate cloud computing continues to mature, as multiyear contracts become the norm and cloud latecomers start to dip their toes. It has been 14 years since AWS unveiled its first cloud services, and that business is now on a pace to generate $43 billion in revenue a year, Amazon CFO Brian Olsavsky said on the company's earnings call.

Sure, AWS revenue growth slowed to 29% year-over-year, but AWS still generated $10.8 billion in revenue. For its part, Google Cloud reported a 43% jump in revenue during the quarter, which was slower than the 52% revenue growth recorded for that segment during the first quarter.

On the company's conference call, Alphabet CFO Ruth Porat attributed Google Cloud's slower overall growth to a tough comparison against last year, when Google increased prices for G Suite customers. But she also said that revenue from Google Cloud Platform, the most AWS-comparable line item in the overall Google Cloud bucket, increased at a pace "meaningfully above" the overall number.

These are strange times to be doing business, and Amazon's Olsavsky acknowledged that its customers have different feelings about the current situation.

Companies in industries that are disproportionately affected by the pandemic — like travel — are thinking in the short term and are obsessed with reducing any costs associated with doing business this year, while other companies see the cloud as a lifeline. "One of the best ways to save money is to use the cloud," Olsavsky said, which ignores some short-term switching costs but is generally true in the long run.

Assuming you can see past the current state of the U.S. economy, there is one prominent signal that the big cloud vendors still very much believe in the long-term growth potential of the cloud: capital expenditures.

Amazon's investments are a little hard to gauge because the company spends so much on the fulfillment centers required to deliver same-day toilet paper supplies, but it more than doubled investments in property and equipment during the second quarter. A significant portion of that investment is required to maintain service levels for AWS, as well as to plan for future growth.

Google spent far less on capital expenditures in the second quarter of 2020 compared to last year, but Porat said it spent roughly the same amount of money on servers, delaying the expansion of new offices after announcing earlier this week that employees will be allowed to work from home until the middle of 2021. It will also delay the construction of new data centers thanks to improved server utilization efficiency, she said.

Capital expenditures are an imperfect metric for cloud computing competitiveness, but they are also a competitive moat. Simply put, operating a world-class cloud infrastructure service in 2020 is an expensive undertaking, and any money cloud providers can save on building expenditures for open-floor plan offices amid a pandemic can be redirected toward revenue-generating infrastructure.

That means that whatever short-term concerns continue to make the lives of cloud salespeople more challenging, all three of the big U.S. cloud providers continue to look to the future. A sizable amount of workloads remain locked up in old-school data centers, and there's still little incentive for startups to grow their businesses on anything other than cloud services.

Protocol | China

China’s era of Big Tech Overwork has ended

Tech companies fear public outcry as much as they do regulatory crackdowns.

Chinese tech workers are fed up. Companies fear political and publish backlashes.

Photo: Susan Fisher Plotner/Getty Images

Two years after Chinese tech workers started a decentralized online protest against grueling overtime work culture, and one year after the plight of delivery workers came under the national spotlight, a chorus of Chinese tech giants have finally made high-profile moves to end the grueling work schedules that many believe have fueled the country's spectacular tech boom — and that many others have criticized as exploitative and cruel.

Over the past two months, at least four Chinese tech giants have announced plans to cancel mandatory overtime; some of the changes are companywide, and others are specific to business units. ByteDance, Kuaishou and Meituan's group-buying platform announced the end of a policy called "Big/Small Week," where a six-day workweek is followed by a more moderate schedule. In early June, a game studio owned by Tencent rolled out a policy that mandated employees punch out at 6 p.m. every Wednesday and take the weekends off.

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Shen Lu

Shen Lu is a reporter with Protocol | China. She has spent six years covering China from inside and outside its borders. Previously, she was a fellow at Asia Society's ChinaFile and a Beijing-based producer for CNN. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. Shen Lu is a founding member of Chinese Storytellers, a community serving and elevating Chinese professionals in the global media industry.

Over the last year, financial institutions have experienced unprecedented demand from their customers for exposure to cryptocurrency, and we've seen an inflow of institutional dollars driving bitcoin and other cryptocurrencies to record prices. Some banks have already launched cryptocurrency programs, but many more are evaluating the market.

That's why we've created the Crypto Maturity Model: an iterative roadmap for cryptocurrency product rollout, enabling financial institutions to evaluate market opportunities while addressing compliance requirements.

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Caitlin Barnett, Chainanalysis
Caitlin’s legal and compliance experience encompasses both cryptocurrency and traditional finance. As Director of Regulation and Compliance at Chainalysis, she helps leading financial institutions strategize and build compliance programs in order to adopt cryptocurrencies and offer new products to their customers. In addition, Caitlin helps facilitate dialogue with regulators and the industry on key policy issues within the cryptocurrency industry.
Power

Brownsville, we have a problem

The money and will of Elon Musk are reshaping a tiny Texas city. Its residents are divided on his vision for SpaceX, but their opinion may not matter at all.

When Musk chose Cameron County, he changed its future irrevocably.

Photo: Verónica G. Cárdenas for Protocol

In Boca Chica, Texas, the coastal prairie stretches to the horizon on either side of the Gulf of Mexico, an endless sandbar topped with floating greenery, wheeling gulls and whipping gusts of wind.

Far above the sea on a foggy March day, the camera feed on the Starship jerked and then froze on an image of orange flames shooting into the gray. From the ground below, onlookers strained to see through the opaque sky. After a moment of quiet, jagged edges of steel started to rain from the clouds, battering the ground near the oceanside launch pad, ripping through the dunes, sinking deep into the sand and flats.

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Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

People

Facebook’s push to protect young users is a peek at the future of social

More options, more proactive protections, fewer one-size-fits-all answers for being a person on the internet.

Social media companies are racing to find ways to protect underage people on their apps.

Image: Alexander Shatov/Unsplash

Social media companies used to see themselves as open squares, places where everyone could be together in beautiful, skipping-arm-in-arm harmony. But that's not the vision anymore.

Now, Facebook and others are going private. They're trying to rebuild around small groups and messaging. They're also trying to figure out how to build platforms that work for everyone, that don't try to apply the same set of rules to billions of people around the world, that bring everyone together but on each user's terms. It's tricky.

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Power

Who owns that hot startup? These insiders want to clear it up.

Cap tables are fundamental to startups. So 10 law firms and startup software vendors are teaming up to standardize what they tell you about investors' stakes.

Cap tables describe the ownership of shares in a startup, but they aren't standardized.

Illustration: Protocol

Behind every startup, there's a cap table. Startups have to start keeping track of who owns what, from the moment they're created, to fundraising from venture capitalists, to an eventual IPO or acquisition.

"Everything that happens that is a sexy thing that's important to the tech world, it really is something having to do with the cap table," said David Wang, chief innovation officer at the Wilson Sonsini Goodrich & Rosati law firm.

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Biz Carson

Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.

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