Snap (Snapchat) has released their S-1 filing’s today and there is one interesting tidbit of information buried within the filing. According to the document, Snapchat is investing $400 million int cloud services from Google each year for the next five years.
The deal was completed a few days ago (January 30th) and under the terms, Snapchat will be investing more of its money in Google’s service. Snapchat has been using Google’s Cloud platform since 2013 but the size of this deal makes it one of Google’s largest cloud customers. In addition, it also is a sign to investors of the rapid growth of Snapchat and the sheer amount of data they have access too.
Google doesn’t break out its revenue from its cloud infrastructure, instead, it is placed in a category along with their hardware and Google Play sales in an “other section” for revenue. That being said, $400 million a year is a significant portion of that segment’s business which only totaled $3.4 billion in the previous quarter.
Relying on Google though can be a blessing and a curse as Google Cloud is restricted in the Chinese market. Meaning, if Snap is looking to expand to overseas they are going to need to find another vendor for cloud services in mainland China.
“We also face regulatory challenges that may affect our ability to grow in certain markets. For example, we have very limited access to the China market, as we have not yet established an operating presence in China to support Snapchat. Access to Google, which currently powers our infrastructure, is restricted in China.”