Snap IPO filing unveils heavy Google Cloud reliance

Fariha Khan
February 3, 2017
538

Having filed for IPO recently, Snap’s S1 document is packed with information about Snapchat usage and internal operation. The company notes that the “vast majority” of Snapchat runs on Google Cloud, with a newly signed $2 billion 5 year agreement. Besides, it has also been mentioned that work to improve the app’s experience is in progress.

Snap does not conceal that the most users are on iOS, resulting in “prioritized development” over Android. Despite of feature parity, experience as well as performance has lagged on Google devices. Snap recognizes that they have to prioritize development of their products to operate on smartphones with Android OS to continue growth in user engagement.

Another risk is Snap’s too much dependence on Google Cloud for most of its computing, storage, bandwidth, and additional services. A $2 billion agreement was signed recently with Snap paying $400 million per year for Google services until 2022. Though it is good for Google’s objectives for cloud like infrastructure could be precarious, with the filing observing how a transition to one more cloud provider would be tough to implement and will cause them to undergo significant time and cost. In addition, it notes that for some services offered by Google in the market there is no other alternative.

But the agreement is nonexclusive, with the firm discussing with an undisclosed cloud provider at the moment for redundant infrastructure support of its business operations. Snap notes that in future they may build their own infrastructure.