Snap commits to spending $1B with AWS

Combined with its commitment to Google, Snap plans to spend $3B on cloud services over five years -- and may build its own infrastructure.
Written by Stephanie Condon, Senior Writer

Snap Inc., the parent company of the messaging app Snapchat, is committing to spend $1 billion with Amazon Web Services over the next five years, the company noted in an amended Securities and Exchange Commission filing. Additionally, the company noted it may invest in building its own infrastructure in the future.

When Snap filed for IPO last week, its filing suggested the company would go all in with Google Cloud. The company is committed to spending $2 billion with Google Cloud over five years.

The amended filing notes that Snap will use AWS for "redundant infrastructure support of our business operations." The company first started using AWS cloud services in March 2016. Its new payments to AWS are slated to increase over the next five years: It has committed to paying Amazon $50 million in 2017, $125 million in 2018, $200 million in 2019, $275 million in 2020, and $350 million in 2021.

The amendment takes some of the shine off of Snap's agreement with Google, though it's still a major deal for Google as it tries to catch up with Amazon's cloud business. The latest calculations show AWS is still largely dominant, accounting for one-third of the cloud infrastructure market -- more than Google, Microsoft, and IBM combined.

According to Canalys researchers, spending on cloud infrastructure services in 2016 totaled $38.1 billion and should reach $55.8 billion in 2017.

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