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Google Wins Largest Healthcare Cloud Deal with Ascension

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Google (GOOG) won a deal to provide cloud computing services to Ascension, the largest Catholic health system in the world. Ascension operates 150 hospitals and over 50 senior living facilities across the US. According to Reuters, Ascension will become GOOG’s largest healthcare cloud customer to date.

Previously, Google signed Mayo Clinic as a cloud customer in a deal. Therefore, the addition of Ascension should deepen Google cloud business’s penetration of the healthcare sector. As it builds out its cloud business, GOOG identified six sectors as a priority. These sectors are government, healthcare, retail, media, energy, and finance.

In retail, Google recently signed Macy’s (M) as a cloud customer. Its other big-name retail cloud customer is Target (TGT). In finance, GOOG recently unveiled the National Australia Bank as its new cloud customer.

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Google cloud business praised as a major growth driver

Unlike Amazon (AMZN) and Microsoft (MSFT), Google doesn’t regularly update the world on the size of its cloud business growth. The last time we got a hint of the size and growth of GOOG’s cloud business was in July. At that time, GOOG said its cloud business was making an average of $8.0 billion in annual revenue. Previously in April, the company said the cloud business was rating $4.0 billion in annual revenue.

However, cloud business remains one of GOOG’s most important revenue growth drivers. “Q3 was another great quarter at Google, with strong revenue growth driven by mobile search, YouTube and Cloud,” said CEO Sundar Pichai.

GOOG bundles cloud sales with hardware sales under a reporting line called Google’s “other revenues.” Google’s “other revenues” segment rose 39% YoY (year-over-year) to $6.4 billion in the third quarter.

Huge revenue opportunity

The cloud market presents a huge growth opportunity for Google. The global cloud market made $182.4 billion in revenue in 2018. That will grow to $331.2 billion by 2022.

In addition to boosting Google’s growth, the cloud market promises to help the company break its reliance on the advertising market. Advertising sales made up 84% of total revenue at parent company Alphabet (GOOGL) in the third quarter. Alphabet operates several businesses across multiple industries. However, Google is its main business, contributing over 99% of revenue.

But Google’s grip on the advertising market is weakening amid surging competition from Amazon. To safeguard its future, GOOG seeks to diversify outside the advertising market. The cloud market is an attractive alternative.

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