DeepMind’s Value to Google

While DeepMind is certainly not declaring a positive net income, it remains unclear how Google values DeepMind’s contributions internally. Considering that the vast majority of Google’s revenue comes from products hosted in data centers, it seems that the fiscal benefits of DeepMind’s work to reduce Google’s data centers’ energy use by as much as 40% may not be adequately represented in DeepMind’s financial statements.

After all, a data center is practically just a collection of thousands of electric heaters. These heaters also require dedicated cooling units to ensure they do not overheat. In 2016, Gartner estimated that Google had over 2.5 million servers. Assuming that each server is a 300W heater operating at a mean 2/3 capacity, and that it takes an equivalent amount of power to cool, we can easily estimate that Google uses 1 gigawatt on average. At roughly $0.12 per KWh, this suggests that powering their data centers costs $120k per hour. This may be a gross underestimate of current costs for numerous reasons that I won’t go into, but for a concrete example consider that in 2016 for a single data center in The Netherlands Google purchased the entire 62 megawatt output of a nearby wind farm (Google has since quadrupled their investment into this one of their roughly fifteen data centers). Regardless, at $120k per hour this would place Google’s annual data center energy costs at $1.05 billion. Given this estimate, based on 2016 numbers, DeepMind’s contributions to reduce Google’s energy costs could be as much as $400 million. 

Given these numbers and the figures from the previous blog post, it appears that Google’s ROI from its acquisition of DeepMind isn’t reflected clearly in the UK financial documents for the latter.

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