Brief

Snap Inc. commits to spending $2B on Google Cloud

Dive Brief:

  • Snap Inc. signed a new Google Cloud Platform License Agreement on January 30, committing to spend $2 billion over the next five years, according to a filing submitted to the Securities and Exchange Commission.
  • The agreement requires Snap, Snapchat's parent company, to purchase at least $400 million of cloud services in each year of the agreement, totaling $2 billion over five years. Snap said it signed the agreement because "our ability to achieve and maintain long term operating leverage depends on our ability to efficiently scale both our advertising business and the infrastructure that supports our growing user engagement."
  • The company already relies on Google Cloud to run the vast majority of their operations, and said disrupting that would "negatively affect our operations and seriously harm our business."

Dive Insight:

It’s another big win for Google, which has been pushing its enterprise cloud services hard for the last 18 months. Now, it is helping companies scale their services. With Snap planning to go public in the near future, Google has a chance to prove the capability and reliability of its tools. 

Last year, Google secured several major deals, including pacts with both Apple and Spotify — companies that previously relied exclusively on Amazon Web Services as their cloud providers. The $2 billion deal with Snap is yet another feather in its cap.

Snap said it needs to rely on third-party infrastructure to run and scale its services and that building its own infrastructure would require significant investment. The company did not rule out building its own infrastructure at some point, however.

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Filed Under: IT Strategy Cloud Computing