Snapchat signs $1bn cloud deal with AWS
Snapchat has struck a deal with Amazon Web Services (AWS) to offer redundancy for its messaging platform, at the cost of $1 billion over the next five years.
Snap, the parent company of the picture messaging-based social media platform, already has a deal with Google, spending $400 million a year on its Cloud Platform.
Snapchat has around 158 million daily active users, but runs almost entirely in the cloud. It was one of Google’s first high profile customers when it signed up to its Infrastructure-as-a-Service offering in 2011.
In a filing for an upcoming IPO, Snap revealed it has also struck a deal with Amazon to boost the redundancy of its service, taking its estimated yearly spend on cloud hosting to $450 million – more than the company generated in revenue in 2016.
In the filing, Snapchat said: “In March 2016, we entered into the AWS Enterprise Agreement for the use of cloud services from Amazon Web Services, Inc., or AWS, that was amended in March 2016, and again in February 2017. Such agreement will continue indefinitely until terminated by either party.
“Under the February 2017 addendum to the agreement, we committed to spend $1.0 billion between January 2017 through December 2021 on AWS services ($50.0 million in 2017, $125.0 million in 2018, $200.0 million in 2019, $275.0 million in 2020, and $350.0 million in 2021). If we fail to meet the minimum purchase commitment during any year, we are required to pay the difference.”
Snapchat also intimated that it may set up its own infrastructure in future in an attempt to reduce costs, adding: “In the future, we may invest in building our own infrastructure to better serve our customers.”