DeepMind, Google’s AI Unit, Reports Big Loss
DeepMind requires deep pockets.
Reports surfaced this week that the London-based AI lab acquired in 2014 by Google parent Alphabet for about $600 million lost a staggering $649 million in the last year. The Financial Times and other media outlets also reported Thursday (Dec. 17) that Alphabet (NASDAQ: GOOGL) has written off roughly $1.5 billion in debt associated with loan and interest repayments due from DeepMind.
According to a filing with the U.K. Companies House, which oversees corporate registrations in England, Scotland and Northern Ireland, DeepMind’s administrative expenses jumped by more than $200 million during 2019. “The increase mainly relates to a rise in technical infrastructure, staff costs and other related charges,” the Google AI unit reported.
This week’s filing also disclosed that Google Ireland Holdings waived repayment of “intercompany loans” and accrued interest totaling £1.1 billion ($1.48 billion).
“Machine learning research and application is an emerging market characterized by continuous change and intense competition,” the U.K. filing noted. “As a result, [DeepMind] will continue to face risks and uncertainties, which may have a significant impact on its ability to achieve continued success within its market.
“To mitigate this risk [DeepMind] follows a well-informed risk-based approach for decision making,” it noted.
Offsetting some of its losses, DeepMind reported 2019 revenues totaling about $358 million associated with providing machine learning R&D services. It was unclear from the filing whether those services were provided to Alphabet customers or to internal Google AI projects.
The Google unit also listed 2019 donations to university researchers totaling about $8.5 million, down from $18.2 million the previous year.
Despite growing losses and the debt write-off, DeepMind told regulators, “There are no future changes anticipated in the business of the company at this time.”
DeepMind employs about 1,000 AI researchers, some commanding seven-figure salaries, reflecting the intense competition for talent. The Alphabet unit is reportedly in the midst of moving to a new London headquarters. The U.K. filing listed expenditures totaling about $1.75 million last year for construction and production equipment.
While not referring specifically to its DeepMind unit, Alphabet and Google CEO Sundar Pichai pointed to “deep investments we’ve made in AI and other technologies” during its third-quarter earnings call in October.
During a second quarter financial review in July, Pichai added he was “happy with the pace at which our R&D on AI is progressing.” He added, “I'm excited at the pace at which our engineering and R&D teams are working, both across Google and DeepMind.”
In a statement to CNBC, a DeepMind spokesperson added: “During the period covered by these accounts, DeepMind laid the foundations for our groundbreaking results in protein structure prediction — a 50-year grand challenge in biology — and collaborated with teams across Google to deliver real-world impact at scale.”
