Deepmind, the London-based AI company acquired by Google in 2014 for around $600 million, has booked its first ever annual profit. Deepmind has consistently operated at a heavy loss since being founded in the UK in 2010 with its activities predominantly research-based and focused on the long term development of AI algorithms and the computer science that underpins the revolutionary technology.
However, as AI has developed over the years, with Deepmind regarded as one of the field’s global leaders, Google has started to incorporate its daughter company’s intellectual property into commercial products. Despite Google owning the company that has meant paying Deepmind licensing fees, which last year translated into revenues of £826 million.
A number of other companies owned by Alphabet, the holding company set up to better organise Google and the growing number of spin-off companies the tech giant has created over the years, have also started to make use of Deepmind IP. That’s seen a surge in the AI company’s income from just £266 million in 2019.
The more than tripling of Deepmind’s revenues means it was able to post a pre-tax profit of £46 million for the 2020 financial year compared to a loss of £461 million in 2019. Parent-holding Alphabet also waived a £1.1 billion loan to the AI company in 2019.
The company’s statement to accompany the profit announcement read:
“During this reporting period we made significant progress in our mission of solving intelligence to accelerate scientific discovery.”
Deepmind has started to make a series of AI-powered breakthroughs being heralded as historically significant and likely to be revolutionary in fields from drugs discovery to chemical engineering and astronomy. Last year one of its algorithms learned how to visualise and predict the structure of proteins – likely to prove one of the most influential discoveries in the history of humanity.
The more immediately profitable AI tools are, however, those Deepmind has developed to be used in Google and Alphabet products like its voice-activated assistant, digital advertising platforms and Google Maps. A collaboration with the latter led to a 50% improvement in the accuracy of the estimated arrival times the application offers drivers, passengers and pedestrians.
Deepmind is still led by its co-founder Demis Hassabis, a former chess champion who became a games developer and is now the company’s chief executive. He established the AI company alongside fellow co-founders Shane Legg and Mustafa Suleyman. Legg, a machine learning expert, is Deepmind’s Chief Scientist while Suleyman left the company in 2019 and currently holds an AI policy role with Google.
Deepmind has high overheads as a result of employing many of the world’s leading AI experts and research scientists, who can command seven-figure salaries as a result of fierce competition for talent with other tech giants. The company currently employs around 1000 people globally and its wage bill and other staff costs came in at £474 million in 2020, up £6 million from 2019.