> Enterprises with Google Cloud spend commitments will be able to draw down their GCP commitments for these purchases.

This is a fairly big move by Google... It means revenue they have already booked and reported to shareholders they now might have to give away - potentially all of it. Bean counters hate that!

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eitally 2 minutes ago | parent | next [-]

No. It means customers can turn booked revenues into billed revenue by consuming OAI models on GCP (pass-through contracting). OAI will get their money, too, but Google will charge the customer for actual platform consumption. This was previously missing and GCP customers who wanted ChatGPT or Codex were limited to just making API calls from their GCP projects .

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jaynate 26 minutes ago | parent | prev | next [-]

That’s not the way it works. Google still recognizes the revenue. The cost of goods sold and gross profit are what get hit here but it’s no different than any other partner than can sell their product through the Google marketplace and take advantage of committed spend.

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paxy 5 hours ago | parent | prev | next [-]

“Reported to shareholders” doesn’t really mean anything. There are thousands of such line items on financial reports. The ones that matter, such as recognized revenue, don’t count future bookings. It is understood that customers renege on these commitments all the time.

Google is simply telling customers - there’s a new Google Cloud service, and you can use it under your existing account.

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redwood 3 hours ago | parent | prev [-]

Let's not quite right... you don't recognize revenue in a consumption business until the usage actually happened

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londons_explore 3 hours ago | parent [-]

pretty sure that's what the "spend commitment" changes. It's a "use it or lose it" agreement. It's as good as a debt the moment it is signed, used or not.

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mediaman 2 hours ago | parent | next [-]

GAAP does not permit booking contracted future revenue onto the balance sheet or income statement, because the spend is not actually an unconditional debt until the service has been rendered.

It doesn't matter if it's committed or not, it still won't be recognized on the formal financial statements.

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MisterMunchkin 2 hours ago | parent | prev [-]

I think they declare it as pipeline revenue or something instead of current year revenue

	▲	jaynate 21 minutes ago \| parent [-]
		RPO remaining performance obligations (not on balance sheet) unless prepaid then its deferred revenue (balance sheet). When it’s consumed it is recognized as revenue.