This article is based on reporting originally published by Benzinga in December 2019. Market share figures and financial data reflect the state of the cloud industry as of Q3 2019.
The Report That Started the Conversation
A report in The Information — citing an unnamed source’s account of a 2018 internal meeting — claimed that Google set an ambitious internal goal: surpass at least one of the two dominant cloud providers, Amazon Web Services (AWS) or Microsoft Azure, by 2023. The report further suggested that failure to hit that target could put funding for the Google Cloud division at risk.
Google pushed back quickly. “Reports of these conversations from 2018 are simply not accurate,” the company said in a statement sent to The Information after the piece ran.
Whether or not the specific ultimatum was real, the underlying question is legitimate and worth examining: given the trajectory of cloud computing, can Google realistically close the gap?
Why Cloud Computing Matters So Much
Cloud services — where businesses rent computing infrastructure from a hosting provider rather than building and maintaining their own — have moved from a cost-saving option to a strategic necessity. Enterprises of all sizes are migrating workloads, running AI and machine learning pipelines, and building new applications entirely on cloud platforms.
Growth figures from Q3 2019 underline how fast the sector was moving: according to data cited in the original Benzinga report, the worldwide cloud services market grew by nearly 40% year-over-year in that quarter. The concurrent rollout of 5G networks was expected to further accelerate demand for scalable, low-latency cloud infrastructure.
“They will need to be in cloud,” Tigress Financial analyst Ivan Feinseth said, adding that Google’s continued investment made an exit from the market highly unlikely.
The Market Share Gap Is Real
Data from analytics firm Canalys, published in October 2019, painted a clear picture of where each player stood at that time:
- Amazon Web Services (AWS): approximately 32% market share — the clear industry leader, though growth was beginning to slow.
- Microsoft Azure: approximately 17% market share — a strong and accelerating second place.
- Google Cloud: approximately 7% market share — a distant third, but growing rapidly.
Google’s cloud revenue grew approximately 70% year-over-year in Q3 2019, reaching just under $2 billion for the quarter, according to Canalys. That growth rate was high enough to push Google into the conversation about legitimately competing for runner-up status — even if the absolute revenue gap with AWS remained enormous.
Google’s Investment Strategy
Google executives highlighted on a July 2019 earnings call that Google Cloud was one of Alphabet’s fastest-growing business units and its third-largest revenue driver overall. This was not a division being starved of resources.
Feinseth, in a November 2019 note to investors, identified cloud infrastructure and machine learning as the primary future growth drivers for Google. The evidence on the ground supported that view:
- Continued construction and expansion of cloud data centers globally.
- Aggressive hiring of sales staff and cloud engineers.
- Major investment in partner and reseller programs, as noted by Canalys.
Unlike some Google products that were eventually discontinued — Google+ being the most prominent example — cloud infrastructure is deeply embedded in enterprise customer workflows. Switching costs are high, multi-year contracts are common, and the market opportunity is enormous. These factors made an exit from cloud computing implausible to most industry observers, regardless of competitive ranking.
The Amazon vs. Microsoft JEDI Contract
One of the biggest cloud stories of 2019 had nothing to do with Google directly, but illustrated how high the stakes had become. The U.S. Department of Defense awarded its Joint Enterprise Defense Infrastructure (JEDI) contract — a ten-year, $10 billion deal to run cloud computing for the Pentagon — to Microsoft Azure, passing over AWS.
Amazon filed a formal protest, alleging that political interference played a role in the decision. In its complaint, Amazon claimed the contract was awarded to Microsoft because President Donald Trump wanted to penalize Amazon CEO Jeff Bezos. Despite the controversy, the award highlighted that Microsoft had reached a level of credibility and trust with government buyers that put it firmly in the top tier alongside AWS.
For Google, the JEDI episode was a reminder of how much enterprise credibility — not just technology or pricing — matters in winning large institutional contracts.
What Catching Up Would Actually Require
Closing a gap of 25 percentage points in market share (AWS vs. Google Cloud, as of Q3 2019) is not a short-term project. Several structural challenges make it difficult:
- Enterprise trust: AWS and Azure have years of enterprise relationships, compliance certifications, and government contracts that Google is still building.
- Sales motion: Cloud is sold, not just bought. Google historically relied on a product-led growth model; competing in enterprise cloud requires a large, experienced enterprise sales force — something it was actively investing in as of 2019.
- Ecosystem depth: AWS has the broadest catalog of managed services. Azure benefits from deep integration with Microsoft’s existing enterprise software stack (Active Directory, Office 365, Windows Server). Google’s differentiation is strongest in data analytics, Kubernetes (which Google originated), and AI/ML tooling.
- First-mover advantage: AWS launched in 2006. Enterprise infrastructure decisions are sticky; migrating a workload is expensive and risky, which benefits incumbents.
Google’s best path to closing the gap likely runs through its genuine strengths: Kubernetes and container orchestration, BigQuery and data analytics, TensorFlow and AI/ML infrastructure, and competitive pricing on compute-intensive workloads.
Bottom Line
As of late 2019, Google Cloud was growing faster than either of its two main rivals on a percentage basis, but it was doing so from a much smaller base. The market share gap with AWS was substantial, and the gap with Azure was still significant. Whether Google could realistically leapfrog either competitor by 2023 — as the contested internal report suggested was a goal — was deeply uncertain.
What was not in doubt: cloud computing had become one of the most strategically important and financially significant markets in enterprise technology, and Google had no credible reason to walk away from it. The question was never really whether Google would compete, but how effectively it could translate fast growth rates into durable market share gains against two deeply entrenched rivals.