Technology

Google is hosting its annual Cloud Next conference in San Francisco this week. With 20,000 developers in attendance, Cloud Next has become the cloud-centric counterpart to Google I/O. A few years ago, when the event only had about 2,000 attendees and Google still hosted it on a rickety pier, Diane Greene had just taken over as the CEO of Googlecloud businesses and Google had fallen a bit behind in this space, just as Amazon and Microsoft were charging forward. Since then, Google has squarely focused on bringing business users to its cloud, both to its cloud computing services and to G Suite.

Ahead of this yearCloud Next, I sat down with Diane Greene to talk about the current state of Google Cloud and what to expect in the near future. As Greene noted, a lot of businesses first approached cloud computing as an infrastructure play — as a way to get some cost savings and access to elastic resources. &Now, itjust becoming so much more. People realize ita more secure place to be, but really, I feel like in its essence itall about super-charging your information to make your company much more successful.& Itthe cloud, after all, where enterprises get access to globally distributed databases like Cloud Spinner and machine learning tools like AutoML (and their equivalent tools from other vendors).

When she moved to Google Cloud, Greene argued, Google was missing many of the table stakes that large enterprises needed. &We didn&t have all the audit logs. We didn&t have all the fine-grained security controls. We didn&t have the peer-to-peer networking. We didn&t have all the compliance and certification,& she told me.

People told her it would take Google 10 years to be ready for enterprise customers. &Thathow long it took Microsoft. And I was like, no, itnot 10 years.& The team took that as a challenge and now, two years later, Greene argues that Google Cloud is definitely ready for the enterprise (and shetired of people calling it a ‘distant third& to AWS and Azure).

Today, when she thinks about her organizationmission, she sees it as a variation on Googleown motto. &Googlemission is to organize the worldinformation,& she said. &Google Cloudmission then is to supercharge our customers& information.&

When it comes to convincing large enterprises to bet on a given vendor, though, technology is one thing, but a few years ago, Google also didn&t have the sales teams in place to sell to these companies. That had to change, too, and Greene argues that the companynew approach is working as well. And Google needed the right partners, too, which it has now found with companies like SAP, which has certified GoogleCloud for its Hana in-memory database, and the likes of Cisco.

A few months ago, Greene told CNBCshe thought that people were underestimating the scale of Googlecloud businesses. And she thinks thatstill the case today, too. &They definitely are underestimating us. And to some extent, maybe that hurt us. But we love our pipeline and all our engagements that we have going on,& she told me.

Getting large businesses on board is one thing, but Greene also argued that today is probably the best time ever to be an enterprise developer. &I&ve never seen companies so aggressively pursuing the latest technology and willing to adopt this disruptive technology because they see the advantage that can give them and they see that they won&t be competitive if the people they compete with adopt it first,& Greene told me. &And because of this, I think innovation in the enterprise is happening right now, even faster than it is in consumer, which is somewhat of a reversal.&

As for the companies that are choosing Google Cloud today, Greene sees three distinct categories. There are those that were born in the cloud. Think Twitter, Spotify and Snap, which are all placing significant bets on Google Cloud. Not shy to compare Googletechnology prowess to its competitors, Green noted that &they are with Google Cloud because they know that we&re the best cloud from a technology standpoint.&

But these days, a lot of large companies that preceded the internet but were still pretty data-centric are also moving to the cloud. Examples there, as far as Google Cloud customers go, include Schlumberger, HSBC and Disney. And itthose companies that Google is really going after at this yearNext with the launch of the Google Services Platform for businesses that want or need to take a hybrid approach to their cloud adoption plans. &They see that the future is in the cloud. They see thatwhere the best technology is going to be. They see that through using the technology of the cloud they can redeploy their people to be more focused on their business needs,& Greene explained.

Throughout our conversation, Greene stressed that a lot of these companies are coming to Google because of its machine learning tools and its support for Kubernetes.&We&re bringing the cloud to them,& Greene said about these companies that want to go hybrid. &We are taking Kubernetes and Istio, the monitoring and securing of the container workflows and we&re making it work on-prem and within all the different clouds and supporting it across all that. And that way, you can stay in your data center and have this Kubernetes environment and then you can spill over into the cloud and thereno lock-in.&

But therealso a third category, the old brick-and-mortar businesses like Home Depot that often don&t have any existing large centralized systems but that now have to go through their own digital transformation, too, to remain competitive.

While itfun to talk about up-and-coming technologies like Kubernetes and containers, though, Greene noted the vast majority of users still come to Google Cloud because of its compute services and data management and analytics tools like BigQuery. Of course therelot of momentum behind the Google Kubernetes Engine, too, as well as the companymachine learning tools, but enterprises are only now starting to think about these tools.

But Greene also stressed that a lot of customers are looking for security, not just in the cloud computing side of Google Cloud but also when it comes to choosing the G Suite set of productivity tools.

&Companies are getting hacked and Google, knock on wood, is not getting hacked,& she noted. &We are so much more secure than any company could ever contemplate.&

But while thatdefinitely true, Google has also faced an interesting challenge here because of its consumer businesses. Greene noted that it sometimes takes people a while to understand that what Google does with consumer data is vastly different from what it does with data that sits in Google Cloud. Google, after all, does mine a good amount of its free users& data to serve them more relevant ads.

&We&ve been keeping billions of peopledata private for almost 20 years and thata lot of hard work, but a cloud customerdata is completely private to them and we do have to continually educate people about that.&

So while Google got a bit of a late start in getting enterprises to adopt its Cloud, Greene now believes that iton the right track. &And the other thing is, we&re playing the long game,& she noted. &This thing is early. Some people estimate that only 10 percent of workloads are in the big public clouds. And if itnot in a public cloud, it is going to be in a public cloud.&

The European Unionantitrust authorities have issued a series of penalties, fining consumer electronics companies Asus, Denon - Marantz, Philips and Pioneer more than€110 million (~$130M) in four separate decisions for imposing fixed or minimum resale prices on their online retailers in breach of EU competition rules.

It says the four companiesengaged in so called &fixed or minimum resale price maintenance (RPM)& by restricting the ability of their online retailers to set their own retail prices for widely used consumer electronics products — such as kitchen appliances, notebooks and hi-fi products.

Asus has been hit with the largest fine (€63.5M), followed by Philips (€29.8M). The other two fines were €10.1M forPioneer, and€7.7M for Denon - Marantz.

The Commission found the manufacturers put pressure on ecommerce outlets who offered their products at low prices, writing: &If those retailers did not follow the prices requested by manufacturers, they faced threats or sanctions such as blocking of supplies. Many, including the biggest online retailers, use pricing algorithms which automatically adapt retail prices to those of competitors. In this way, the pricing restrictions imposed on low pricing online retailers typically had a broader impact on overall online prices for the respective consumer electronics products.&

It also notes that use of &sophisticated monitoring tools& by the manufacturers allowed them to &effectively track resale price setting in the distribution network and to intervene swiftly in case of price decreases&.

&The price interventions limited effective price competition between retailers and led to higher prices with an immediate effect on consumers,& it added.

In particular,Asus, was found to have monitored the resale price of retailers for certain computer hardware and electronics products such as notebooks and displays — and to have done so in two EU Member States (Germany and France), between 2011 and 2014.

While Denon - Marantz was found to have engaged in &resale price maintenance& with respect to audio and video consumer products such as headphones and speakers of the brands Denon, Marantz and Boston Acoustics in Germany and the Netherlands between 2011 and 2015.

Philips was found to have done the samein France between the end of 2011 and 2013 — but for a range of consumer electronics products, including kitchen appliances, coffee machines, vacuum cleaners, home cinema and home video systems, electric toothbrushes, hair driers and trimmers.

In Pioneercase, theresale price maintenance covered products including home theatre devices, iPod speakers, speaker sets and hi-fi products.

The Commission said the company also limited the ability of its retailers to sell-cross border to EU consumers in other Member States in order to sustain different resale prices in different Member States, for example by blocking orders of retailers who sold cross-border. Its conduct lasted from the beginning of 2011 to the end of 2013 and concerned 12 countries (Germany, France, Italy, the United Kingdom, Spain, Portugal, Sweden, Finland, Denmark, Belgium, the Netherlands and Norway).

In all four cases, the Commission said the level of fines were reduced — 50% in the case of Pioneer; and 40% for each of the others — due to the companies& co-operation with its investigations, specifying that they had providedevidence with &significant added value& and had &expressly acknowledg[ed] the facts and the infringements of EU antitrust rules&.

Commenting in a statement, commissioner Margrethe Vestager, who heads up the bloccompetition policy, said:&The online commerce market is growing rapidly and is now worth over 500 billion euros in Europe every year. More than half of Europeans now shop online. As a result of the actions taken by these four companies, millions of European consumers faced higher prices for kitchen appliances, hair dryers, notebook computers, headphones and many other products. This is illegal under EU antitrust rules. Our decisions today show that EU competition rules serve to protect consumers where companies stand in the way of more price competition and better choice.&

We&ve reached out to all the companies for comment.

The fines follow the Commissionecommerce sector inquiry, which reported inMay 2017, and showed that resale-price related restrictions are by far the most widespread restrictions of competition in ecommerce markets, making competition enforcement in this area a priority— as part of the ECwider Digital Single Market strategy.

The Commission further notes that the sector inquiry shed light on the increased use of automatic software applied by retailers for price monitoring and price setting.

Separate investigations were launched inFebruary 2017andJune 2017to assess if certain online sales practices are preventing, in breach of EU antitrust rules, consumers from enjoying cross-border choice and from being able to buy products and services online at competitive prices. The Commission adds that those investigations are ongoing.

Commenting on todayEC decision, a spokesman for Philips told us: &Since the start of the EC investigation in late 2013, which Philipsreported in its Annual Reports,the company has fully cooperated with the EC. Philips initiated an internal investigation and addressed the matter in 2014.&

&It is good that we can now leave this case behind us, and focus on the positive impact that our products and solutions can have on people,& he added. &Let me please stress that Philips attaches prime importance to full compliance with all applicable laws, rules and regulations. Being a responsible company, everyone in Philips is expected to always act with integrity. Philips rigorously enforces compliance of its General Business Principles throughout the company. Philips has a zero tolerance policy towards non-compliance in relation to breaches of its General Business Principles.&

Anticipating the decision of the EC, he said the company had already recognized a€30M provision in its Q2 2018.

The Defense Departmentresearch arm, DARPA, is throwing a event around its &Electronics Resurgence Initiative,& an effort to leapfrog existing chip tech by funding powerful but unproven new ideas percolating in the industry. It plans to spend up to $1.5 billion on this over the years, of which about $75 million was earmarked today for a handful of new partners.

The ERI was announced last year in relatively broad terms, and since then it has solicited proposals from universities and research labs all over the country, arriving at a handful that it has elected to fund.

The list of partners and participants is quite long: think along the lines of MIT, Stanford, Princeton, Yale, the UCs, IBM, Intel, Qualcomm, National Labs, and so on. Big hitters. Each institution is generally associated with one of six sub-programs, each (naturally) equipped with their own acronym:

• Software-defined Hardware (SDH) — Computing is often done on general-purpose processors, but specialized ones can get the job done faster. Problem is these &application specific integrated circuits,& or ASICs, are expensive and time-consuming to create. SDH is about making &hardware and software that can be reconfigured in real-time based on the data being processed.&
• Domain-specific System on Chip (DSSoC) — This is related to SDH, but is about finding the right balance between custom chips, for instance or image recognition or message decryption, and general-purpose ones. DSSoC aims to create a &single programmable framework& that would let developers easily mix and match parts like ASICs, CPUs, and GPUs.
• Intelligent Design of Electronic Assets (IDEA) — On a related note, creating such a chipactual physical wiring layout is an incredibly complex and specialized process. IDEA is looking to shorten the time it takes to design a chip from a year to a day, &to usher in an era of the 24-hour design cycle for DoD hardware systems.& Ideally no human would be necessary, though doubtless specialists would vet the resulting designs.
• Posh Open Source Hardware (POSH) — This self-referential acronym refers to a program where specialized SoCs like those these programs are looking into would be pursued under open source licenses. Licensing can be a serious obstacle to creating the best system possible — one chip may use a proprietary system that can&t exist in concert with another chipproprietary system — so to enable reuse and easy distribution they&ll look into creating and testing a base set that have no such restrictions.
• 3-Dimensional Monolithic System-on-a-chip (3DSoC) — The standard model of having processors and chips connected to a central memory and execution system can lead to serious bottlenecks. So 3DSoC aims to combine everything into stacks (hence the 3D part) and &integrate logic, memory and input-output (I/O) elements in ways that dramatically shorten — more than 50-fold — computation times while using less power. The 50-fold number is, I&m guessing, largely aspirational.
• Foundations Required for Novel Compute (FRANC) — That &standard model& of processor plus short term and long term memory is known as a Von Neumann architecture, after one of the founders of computing technology and theory, and is how nearly all computing is done today. But DARPA feels ittime to move past this and create &novel compute topologies& with &new materials and integration schemes to process data in ways that eliminate or minimize data movement.& Itrather sci-fi right now as you can tell but if we don&t try to escape Von Neumann, he will dominate us forever.

These are all extremely ambitious ideas, as you can see, but don&t think about it like DARPA contracting these researchers to create something useful right away. The Defense Department is a huge supporter of basic science; I can&t tell you how many papers I read where the Air Force, DARPA, or some other quasi-military entity has provided the funding. So think of it as trying to spur American innovation in important areas that also may happen to have military significance down the line.

A DARPA representative explained that $75 million is set aside for funding various projects under these headings, though the specifics are known only to the participants at this point. Thatthe money just for FY18, and presumably more will be added according to the merits and requirements of the various projects. That all comes out of the greater $1.5 billion budget for the ERI overall.

The ERI summit is underway right now, with participants and DARPA reps sharing information, comparing notes, and setting expectations. The summit will no doubt repeat next year when a bit more work has been done.