In addition to the $2 billion Snap committed to spending on Google cloud infrastructure over the next five years, the company also revealed today in an amended filing that it expects to spend $1 billion on Amazon’s cloud services over the same time frame. However, the company clarified that it may choose to build its own infrastructure in the future.
Snap’s agreement with Amazon has it spending $50 million this year, then increase its spending in subsequent years until it reaches $350 million in 2021.
The amended filing was spotted this morning by Recode and Reuters, which both noted the sizable deal with Google, and how Snap is committed to using Google’s infrastructure for the vast majority of its business, including computing, storage, bandwidth, and other services. But the deal with Amazon indicates that Snap is not restricted to using only Google’s cloud as it moves forward.
As Snap explains, “our agreement with Google requires that we use their cloud services for substantially all of our hosting requirements,” adding that a Google Cloud disruption of service could harm its business, as could having to transition to a new provider – a move that would be costly, too.
Also included in the updated filing was more information about how Snap sees the broader competitive landscape around the world. It noted that users outside of North America and Europe tend to consume Snap’s content more than they create it – something the company attributed to a variety of factors, including the lack of high-speed cellular access in some regions. This requires users to wait until they’re in an area that has high-speed Wi-Fi, Snap said, which translates into less frequent daily usage as you’d see in developed market.
Those users instead will spend more time watching Stories, instead of sending Snaps and Chats, the company said. This broadcast model where a few users post content many others consume leaves Snap susceptible to competition by broadcast-oriented platforms.
“Fewer Snaps and Chats sent means fewer notifications inviting friends back into the application and therefore lower and more sporadic daily use,” explained Snap.
The amended filing was published a week after the company’s IPO registration, where the company is looking to raise $3 billion.