Alphabet Inc. (GOOGL) SEC Filing 10-Q Quarterly Report for the period ending Friday, June 30, 2023

The $356 million increase in compensation expenses was largely the result of a 6% increase in average headcount, after adjusting for roles affected by the reduction in workforce, partially offset by a reduction in valuation-based compensation liabilities related to certain Other Bets.

Costs and Expenses Cost of Revenues The following table presents cost of revenues, including TAC (in millions, except percentages): Cost of revenues increased $1.8 billion from the three months ended June 30, 2022 to the three months ended June 30, 2023 due to an increase in other cost of revenues and TAC of $1.5 billion and $323 million, respectively.

The overall increase in data center and other operations costs includes $700 million of charges related to employee severance associated with the reduction of our workforce and our office space optimization efforts, partially offset by a reduction in depreciation expense due to the change in the estimated useful lives of our servers and certain network equipment.

Operating expenses were $20.9 billion, an increase of 4% year over year, primarily driven by an increase in compensation expenses largely due to headcount growth, partially offset by a reduction in valuation-based compensation liabilities related to certain Other Bets.

An overall increase in data center and other operations costs was partially offset by a reduction in depreciation expense due to the change in the estimated useful lives of our servers and certain network equipment.