Google to invest $690m in Japan: CEO Pichai

TOKYO — Google plans to invest 100 billion yen ($690m) in Japan through 2024, CEO Sundar Pichai said Friday, as the company capitalizes on the Asia-Pacific region’s growth despite macroeconomic uncertainties.

In an exclusive interview with Nikkei and TV Tokyo in Tokyo, Pichai said: “We are committed to overall 100 billion yen in investment starting last year, through [the] three years through 2024.”

The company says the investment will be directed to submarine cables and human resource development, in addition to building its first data center in Japan. Google will construct the data center in Chiba Prefecture near Tokyo, and plans to begin operations there in 2023.

In addition to increasing the convenience of internet services for customers, Pichai said Google aims to support the digital transformation of Japanese companies through its cloud computing business. “I think it has an opportunity to lead in digital transformation,” he said.

Pichai’s remarks come as the company accelerates the streamlining of its business, as expectations for an economic slowdown grow. Demand for Google’s services grew due to the COVID-19 pandemic, driving the expansion of Google’s parent company, Alphabet. But its profit has declined for two consecutive quarters, through April to June, as inflation and other factors weigh on its business. In July, the company decided to slow the pace of hiring until year’s end.

“We are responding to the macroeconomic uncertainty. As a business, we’ve always known ad spending is correlated to macroeconomic performance, and so we take that into account,” Pichai said.

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“Going into 2023, we will moderate the pace of hiring,” compared with this year, he said. “But we’ll still be hiring in critical roles, especially product and engineering, and other critical functions.”

Google has decided to discontinue Stadia, a game distribution service that uses cloud technology. It has also decided to downsize its advanced development division, Area 120.

Meanwhile, the company announced new smartphones and other products on Thursday. As for its Pixelbook notebook, Pichai said, “We are adjusting our plans for when we will do our next Pixelbook.”

Pichai said Google will continue investing in focused areas like artificial intelligence.

He also pointed out that Asia will become more important to the company. “When we look ahead over the next decade, we do think a lot of growth is going to come from our Asia markets,” he said, citing the rise of superapps, which offer various digital services, and short video platforms.

“Given our focus on Google Cloud, Asia will have to undergo a massive digital transformation across every sector. And we think Google has a role to play,” Pichai said, “so we view this as a big growth opportunity for Google Cloud as well.”

“I pride [us] in our ability to take a long-term view, and our long-term view on Asia is very bullish,” he said.

Source: Nikkei Asia