In fact, actually, since we introduced revenue sharing for Shorts, the total creator earnings generated from Shorts have increased every month, and we expect this to continue. And similar, obviously, to our long-form videos, we’re really committed here to a long-term partnership. And you heard me say this before, right, when creators succeed, we succeed.
Operator: Our next question comes from Stephen Ju with UBS.
Stephen Ju: So Philipp, this is not a new question, but it’s also been about two years since PMax was launched. But it seems like there’s been this long lineage of product development and rollout of things like smart bidding in your history, which I believe at the time was designed to help smaller advertisers more easily run search advertising. And today, you’re helping me generate creators as well as manage my spend and maximize ROI across multiple Google Services. So how are you feeling about enabling SMBs who otherwise could not advertise with you before? And what kind of TAM expansion tailwind does that create for your revenue growth over the longer term?
Philipp Schindler: Look, as you know, SMBs are a huge focus for us. We mentioned this several times before. They’re part of our GCS channel, not only there’s more in this. But they’ve been under a ton of change over the last few years. And our focus has always been here on investing in solutions that really help level the playing field, and you mentioned several of those. So actually, SMBs can compete with bigger brands and more sophisticated advertisers. And so the feedback we’re always getting is they need easy solutions that could drive value quickly, and several of the AI part solutions that you’re mentioning are actually making the workflow and the whole on-ramp and the bidded targeting creative and so on you mentioned that is so much easier for SMBs. So we’re very satisfied with what we’re seeing here.
We will continue to invest. And I feel AI is really a helpful, very interesting future path to make life not only easier but also much more productive and better arise over time, more level playing field for SMBs.
Operator: Our next question comes from Justin Post with BAML.
Justin Post: Maybe one for Sundar and one for Ruth. Just on Search growth, I think there are some concerns on use of competitive AI tools as an alternative to Search. Just wondering if you see any changes in query volumes, positive or negative, since you’ve seen the year evolve and more Search innovative experiences. And what can really make Google stand out versus other AI tools? And then Ruth, CapEx was $11 billion. A step-up, obviously. Any one-time items in there? Or is that how we should think about the new run rate into ’24?
Sundar Pichai: Thanks, Justin. First of all, look, we think about effects on Search, obviously, more broadly. People have a lot of information choices. So — and user expectations are constantly evolving. And so we’ve been doing this for a long time. And I think what ends up mattering is a strong continuous track record of innovation. Obviously, generative AI is a new tool in the arsenal. But there’s a lot more that goes into Search: the breadth, the depth the diversity across verticals, stability to follow through getting actually access to rich, diverse sources of content on the web and putting it all together in a compelling way. And I think, through the year two, when we test, we test Search Generative Experience, particularly against everything that’s out there.
And we can see the progress we are making and how much users are liking the experience better. And so I think I feel very good about the progress. And our road map for ’24 is strong both on the Search and the underlying AI progress, including the model. So I’m pretty excited about what’s ahead of us in ’24.
Ruth Porat: And with respect to CapEx, the CapEx of $11 billion in the fourth quarter, as I indicated, was overwhelmingly investment in our technical infrastructure. To your question, there was no one-time item in there. What it really reflects is our outlook for everything Sundar and Philipp and I have been talking about, the extraordinary applications of AI within Google DeepMind, Google Services, Google Cloud, it’s across the board for users, for advertisers, developers, cloud enterprise customers, governments. And it’s really the long-term opportunity that offer. So last quarter, we did note that CapEx would continue to grow in 2024. We do expect 2024 full year CapEx to be notably larger than 2023. As a note, I think you all know this, but timing of cash payments can affect the quarterly CapEx number. But the main point is we’re continuing to invest.
Operator: Our next question comes from Ross Sandler with Barclays.
Ross Sandler: So I guess a question for, I don’t know if Sundar or Philipp. But if we go back to the DOJ trial that happened in the fall, there was a document that was disclosed from Google that said something along the lines of why being on ad quality team to deliver 20% RPM growth in Search is a fragile strategy. Digging back to 2019, your business has, I think, more than doubled since then. So I guess, as we sit here today in early 2024, how do you feel about Google’s ability to drive Search RPM going forward? And I guess in the context of what Ruth said tonight about the large revenue base, just how do you feel about the monetization?
Sundar Pichai: Look, I think I have tremendous confidence in the quality driven both our work, be it search quality, ads quality, our improvements on search, our improvements on ads RPM, all — 2 foundational pillars are extraordinary focus on ads quality so that we deliver the actual ROI to advertisers and improve the experience for users and all underpinned by rigor and technical excellence and go-to-market excellence, right? So the fundamental attributes don’t change. I think AI gives us opportunity both on the organic side as well as on the monetization side. And I think we are in the early days of it. I think we’ll be able to, taking a long-term view, serve information needs in a deeper way. And so I think about it in that — with that long-term context, and I’m pretty excited about what’s ahead.
Operator: And our last question will be from Mark Mahaney with Evercore.
Mark Mahaney: One question on YouTube AI and one on Cloud. On Cloud first, there’s just this volatility, this material deceleration last quarter and the nice reacceleration this quarter. Is that explained by where we are in the optimization cycle, and it may be generative AI workloads starting to trickle in now and cause that growth curve to bend back up? Any commentary just on the sort of the volatility, the deceleration and the reacceleration that we’ve seen? And then, Philipp, I wanted to ask on the creative side, and particularly on YouTube and ads and the creative, using AI to improve the creative and really to offer SMBs who have been with Google forever but offer them now performance-based video ad campaigns created by AI. Is that kind of a new growth area? How far along are you in terms of offering this out into the market? And do you think that this opens up a new area of spend that wasn’t there before?
