You have seen some of those announcements this quarter beyond the workforce reduction, things that we are doing in, for example, office services, and we are executing against each of these various work streams. So, our view is that there is more to do. And as we try to be clear, we are in execution mode. You will see some of the benefit in ‘23. You will see more of it in ‘24, and we are going to continue building against it beyond.Justin Post Great. Thank you.Operator Thank you. The next question comes from Michael Nathanson of MoffettNathanson. Please go ahead.Michael Nathanson I have one for Philipp and one for Ruth. Philipp, we are trying to get under the hood on Search advertising and trying to understand changes in demand between sellers of goods and sellers of services.
Can you give us any help looking at the service side? Has demand returned back to pre-pandemic levels? And then in terms of goods and e-commerce, have you seen a slowing of demand? Anything you can help us kind of put this – level set it back to maybe pre-pandemic levels to understand services versus goods demand? And then for Ruth, on the terms of efficiency and being more diligent, how does the significantly higher cost of capital impact the way you are managing and evaluating the Other Bets assets? Anything there on how you may be rethinking some of the Other Bets and what are you doing in changing some of the structures about the Other Bets assets? Thanks.Ruth Porat It was a bit hard to hear you. You were breaking up. So, I think I am going to start and address what I heard as the second question, as we are looking at higher cost of capital in this environment, what – how does that affect the way we are looking at Other Bets.
Hopefully, we heard you correctly, it was crackling. Look, I think as we have talked about repeatedly, as it relates to Other Bets, our focus is to use deep technology to drive innovation, and we are very focused on the pace of investment and financial returns. That has been a consistent focus to generate attractive returns. And I think the core operating models and the long-term operating models are going to be the most relevant as we are looking at the returns we can generate. Yes, absolutely mindful of higher cost of capital. But I think its core, we are looking at what’s the value creation and the return on those. And as we indicated when we went through the reduction in force, we similarly worked across the Other Bets and some of them as they are on a path to ongoing growth, we were moderating what is the expense trajectory there as we are looking at what’s the overall return on invested capital.
And we are continuing to work on these to make sure that we are delivering value it. Your point is an important one that’s part of a broader question about the underlying operating assumptions.Michael Nathanson Okay. Philipp, I don’t know if you heard the first one?Philipp Schindler Yes. On the first part, again, it didn’t come across quite clearly, but I hope I understood correctly. In Search, revenues grew modestly year-over-year, again, reflecting an increase in the retail and travel verticals, offset partially by decline in finance and media and entertainment. So, excluding the impact of FX performance, it was actually similar to last quarter. The ongoing performance of Search, notwithstanding the headwinds, reflects really Search’s resilience with the, I would say, ability of Search to surface demand and deliver a measurable ROI in an uncertain environment.
I called out the key verticals in the quarter. There is really no additional color on other verticals. I would say maybe more broadly, what we saw reflects what’s being reported elsewhere, and across the headlines, many companies are very focused on shorter term profitability amidst this uncertainty and some pullback at budgets as well.Michael Nathanson Okay. Thanks. That’s clear.Operator Thank you. The next question comes from Mark Mahaney of Evercore. Please go ahead.Mark Mahaney Okay. Can I try two questions, please? I think Philipp, you talked about kind of a more of a pullback in network ad revenue versus Search and YouTube. Do you have any thoughts on why that was the case? And then Ruth, the cloud business, even with the accounting changes on this very steady march towards profitability, you turned the corner now.
You talked about growing the business for long-term profitability. But are there any reasons why we wouldn’t – why they shouldn’t be sustainably profitable kind of starting from here as the business continues to scale, or could it be that, that profitability could be wobbly for a while before it’s sustainably profitable that segment cloud? Thank you.Ruth Porat Yes. Why don’t I just add, I will take both of those. So, in network, really, it’s a continuation of what we talked about last quarter. We saw the ongoing pullback in advertiser spend. And I would contrast that last quarter, we talked about both a pullback in YouTube and network, and we were pleased that we saw the stabilization in ad spend on a sequential basis in YouTube.
We still saw ongoing pullback in network, which tends to be a mix of businesses, as you know well. And then in terms of cloud, I tried to make that clear in my opening comments as well. I think it’s a really important question. We are very pleased with the Q1 results. And as both Sundar and I noted, we are intensely focused on all elements of the cost space and the long-term path to attractive profitability. At the same time, I think at the core of your question, and what we were trying to convey is we will continue to invest to support long-term growth, in particular, given the opportunities we see delivering AI capabilities to our customers. So, as I have said in the past, you shouldn’t extrapolate from quarter-to-quarter, but we are very pleased to be at this level and are continuing to focus on profitability and long-term value creation here.Mark Mahaney Okay.
Thank you, Ruth.Operator Thank you. And our last question will come from Colin Sebastian from Baird. Please go ahead.Colin Sebastian Great. Thank you. Two for me as well. I guess first, Sundar, the consolidation of the AI teams, I think you talked about that helping to accelerate innovation. So, I am curious, specifically with that consolidation, what are the product milestones that we should look out for related to that? And then Philipp, regarding your comments on retail, specifically on shopping and payments, how should we think about that evolving across the platform this year? Maybe similarly, what are some milestones we should look out for on that front? Thank you.Sundar Pichai Thanks. I am quite excited by bringing the two world-class teams, I think – of both Brain and DeepMind.
