Snapchat

Snap to spend $1 billion on Amazon cloud services

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Written by Kamil Arli

Snap will spend $1 billion on Amazon cloud services, amended filing shows 

Snap Inc.’s Spectacles camera glasses landed in Seattle for the first time Wednesday, but one of the city’s tech giants has quietly captured a much bigger deal from the Snapchat parent company.

Amazon Web Services has secured a five-year, $1 billion commitment from Snap to use cloud services from AWS, according to an amended IPO registration statement filed by the Venice, Calif.-based social media and camera company this morning.

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SNAP IS EMERGING AS A MAJOR USER OF PUBLIC CLOUD SERVICES

Snap is emerging as a major user of public cloud services, and a high-profile example of companies using more than one cloud provider. Snap has separately agreed to spend at least $2 billion with Google Cloud over the next five years, as well. That contract, also signed in just the past couple weeks, was disclosed as part of Snap’s original IPO filing last week.

Here’s the rundown on the AWS deal from the latest Snap filing, as spotted by Recode.

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WE ENTERED INTO THE AWS ENTERPRISE AGREEMENT FOR THE USE OF CLOUD SERVICES

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.

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The AWS deal isn’t a complete surprise. In its original filing, Snap said it was “negotiating an agreement with another cloud provider for redundant infrastructure support of our business operations.” It also added, “In the future, we may invest in building our own infrastructure to better serve our customers.”

About the author

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Kamil Arli

Editor of DigitalReview.co. Digital Media Consultant

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