Snap Inc. to spend $1 billion on Amazon cloud services

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Venice, Los Angeles based Snap Inc. is a privately owned multinational company. This was formerly known as Snapchat. On September 24, 2016, Snap Inc. has announced its rebranding. Since its inception, the company is striving hard to improve its services and investing in many areas.

Snap Inc. on February 9, has announced to spend $1 billion over the next five year to use e-commerce giant Amazon’s cloud services. This company has already signed cloud contract deal of $2 billion with Google. These big deals show how Snap Inc. looks the broader competitive business around the world.

Agreement Highlights

Snap has confirmed its spending roadmap with Amazon. This year Snap Inc will spend $50 million with Amazon. Afterward, the company will increase its spending in coming years until it reaches $350 million in 2021.

As per Snap officials, they will invest this money in building its own infrastructure. A week earlier The Snap Inc. had filed its IPO registration statement. The company is looking to raise $3 billion through IPO. The total capital of the company may be valued around $20 to $25 billion. This is the biggest valuation in a U.S. technology IPO since Facebook Inc.

The further company explains, our deal with Google requires that we use their cloud services for all of our hosting services. Snap Inc. clarified that interruption in Google cloud may harm its business anytime. So to avoid such situation company has decided to go with the new service provider. Although the move will be costly too.

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Snap Inc. has outsourced all data storage infra instead of building its own servers warehouse. As per the company dividing the cloud services project in two giant company, will decrease the dependency. The further company has given a signal that it may build its own infrastructure in future.

A week after the company’s IPO registration, Snap has made minor changes, where the company is looking to raise $3 billion.

Snap Inc. has included details in the updated filing about user habits outside North America and Europe. Sluggish and costly cellular networks outside these two regions have limited the use of its app. Users have to wait until they’re in an area that has high-speed internet or Wi-Fi. Users outside these two regions tend to consume Snap’s content more than they create it, makes them easier targets for Snap’s competitors.

As per the reports, Snapchat Inc. has more than 100 million active users. Of whom about 60 percent are aged between 13 to 24 years. This shows that Snap, a Photo, and Video sharing app is more popular in teens.

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