Snap will pay Google at least $400 million a year for the next 5 years
And what we've learned is that, earlier this very week, Snap entered into a $400 million-a-year deal with the Google Cloud Platform, to provide the infrastructure and services that keep the Snapchat app running.
"The agreement has an initial term of five years and we are required to purchase at least $400.0 million of cloud services in each year of the agreement, though for each of the first four years, up to 15% of this amount may be moved to a subsequent year," says Snap's S-1 IPO filing.
Google Cloud Platform is what technical types would call a "public cloud" service, where engineers like Snapchat's can pay by the minute for unlimited supercomputing services. To this day, Snapchat remains one of the largest users of Google's cloud infrastructure, although it's recently brought a data center specialist in house.
Importantly, the terms of Snap's agreement with Google allow it to use other public cloud providers, too. An example of a company that uses more than one provider is HTC, which as of mid-2o15 used Amazon Web Services for some stuff, Google Cloud Platform for a lot of its image processing, and Microsoft Azure in China, where Google doesn't do business.
At the same time, though, if Snap doesn't meet its $400 million per year spending minimums with Google, it's on the hook for the difference. It's a big deal for Google, which has been jockeying for position with the leading $10 billion Amazon Web Services cloud and the second-place Microsoft Azure.
Notably, Alphabet's investment arm, Google Capital, previously made an investment in Snap.
Google declined to comment.
- Should you be worried about the potential side-effects of the Covishield vaccine?
- India T20 World Cup squad: KulCha back on menu, KL Rahul dropped
- Sales of homes priced over ₹4 crore rise 10% in Jan-Mar in top 7 cities: CBRE
- Gold prices fluctuate as geopolitical tensions ease; US Fed meeting, payroll data to affect prices this week
- Best beaches to visit in Goa in 2024