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By Douglas MacMillan and Jay Greene 

Google's top cloud-computing executive and one of tech's highest-ranking women is departing the company after three years and will be succeeded by a former executive of business-software rival Oracle Corp.

Diane Greene will relinquish her role as CEO of Google Cloud in January, she said in a blog post Friday. Thomas Kurian, a former president of product development at Oracle, will then step in. Ms. Greene will retain her seat on the board of Google parent Alphabet Inc.

Ms. Greene, a Silicon Valley veteran who co-founded corporate-software pioneer VMware Inc., joined Google in 2015 to help it take on Amazon.com Inc. and Microsoft Corp. in the growing market for cloud computing software and services. Ms. Greene expanded Google's sales force and struck deals with corporate clients such as Target Corp. and HSBC Holdings but failed to gain market share at the same rate as Microsoft.

"They haven't performed as well as the expectation was when Diane was brought on," said Holger Mueller, principal analyst at Constellation Research, Inc.

Google remains a relatively tiny player in a market dominated by Amazon, which generated 51.8% of revenue in the global cloud-software market in 2017, according to Gartner. Microsoft outpaced other players, increasing its share to 13.3% last year, from 8.7% the year earlier. Google nudged its share up to 3.3%, from 2.7% in 2016.

Inside Google, where the core business of online ads is showing signs of slowing, cloud computing is seen as a key driver of growth. Google said earlier this year cloud sales generated more than $1 billion quarterly, but it hasn't disclosed any further specifics. Analysts at Credit Suisse expect the division to generate $6.9 billion, or about 6% of Alphabet's total revenue this year -- up from an estimated 3% last year. In the third quarter alone, Amazon's cloud division generated $6.68 billion.

Ms. Greene's investment in artificial intelligence tools has given Google advantages over competitors but also put her at the center of a debate about the ethical use of AI. Her team's work helping the U.S. Defense Department with drone targeting, an effort called Project Maven, sparked internal backlash from Google employees earlier this year, ultimately leading the company to say it would stop renewing the contract.

Mr. Kurian led Oracle's transformation from a vendor of legacy software applications that companies run in their own data centers to one that belatedly embraced cloud computing. His title was president of product development, but he reported directly to Chairman and Chief Technology Officer Larry Ellison, not the company's co-chiefs, Safra Catz and Mark Hurd.

Mr. Ellison is driving Oracle's investment in developing a rival cloud-infrastructure service that competes directly with Amazon, Microsoft and Google, and has routinely criticized market leader Amazon as having inferior technology. At Oracle's OpenWorld conference two years ago, Mr. Ellison predicted "Amazon's lead is over" -- but since then Amazon's cloud-infrastructure business has grown faster than Oracle's much-smaller one.

As Oracle continued to lose ground in that market, Mr. Ellison reorganized the engineering teams that develop the company's cloud-computing services this summer, according to a person familiar with the internal discussions. Oracle announced that Mr. Kurian would take "extended time off" in early September, and said later that month that he wouldn't return.

Mr. Kurian's focus on building Oracle's cloud business, as well as working with its large, corporate customers, should help Google, said Stifel Nicolaus & Co. analyst Brad Reback. The company has been slow to develop the sales and support organization that big corporate customers require.

"He understands the challenge," Mr. Reback said of Mr. Kurian.

Google's hiring of Mr. Kurian could suggest the company will consider making a bid for Red Hat Inc., the software-and-services company that International Business Machines agreed to acquire last month for $33 billion, Mr. Reback said. Red Hat would provide Google with the sales and support muscle, as well as credibility with corporate tech buyers, that it lacks, Mr. Reback said.

"Either you're playing to win or you're not," Mr. Reback said.

(END) Dow Jones Newswires

November 16, 2018 17:10 ET (22:10 GMT)

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