Snap Inc. to Invest $1 Billion on Web Services with Amazon.Com Inc.

Technology - Pavan Pandey - Feb 10,2017

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snap inc to invest 1 billion dollars on web services with amazoncom inc

Snap Inc., the owner of popular social network Snapchat, said it expected to invest $1 billion over the next five years to use Amazon’s cloud service.

On Thursday, Snap Inc. stated that it may eventually invest in building its own infrastructure in an amendment to a filing linked to its planned stock market debut in the month of March.

Snap Inc. publicized the agreement with Amazon.com Web Services in a filing with the United States Securities and Exchange Commission (SEC) relating to company’s upcoming initial public offering. Both Amazon and Alphabet Inc. contracts are for five years.

The owner of Snapchat, which filed its Initial Public Offering (IPO) registration statement the week previous, is looking to raise $3 billion.

Snap Inc. could be valued at amid $20 billion and $25 billion, giving the company the largest valuation in a United States technology Initial Public Offering since Facebook Inc.

Los Angeles-based technology company Snap Inc. has stated that it relies on Google Cloud to host the massive majority of its computing, bandwidth and storage.

The entire details of the arrangement were released Thursday in an update to Snap Inc.’s initial public offering (IPO) documents. Snap Inc. will pay Amazon.com Inc. $50 million in this year and then invest progressively more on the e-commerce company’s cloud and infrastructure services over 2021.

Snap Inc. outsources the heavy-lifting of data storage to outer corporations rather than creating its own server storerooms. Splitting the work between Alphabet Inc.’s Google and Amazon declines the corporation’s dependence on a single company. The IPO filing also states Snap Inc. could still construct its own infrastructure.

The agreement strengthens the ongoing battle among Amazon.com, Alphabet Inc., Microsoft Corp., IBM Corporation and others in the business of offering cloud computing services, as more corporations move more actions to the internet. Amazon.com Inc.'s Amazon Web Services leads, followed by Microsoft Corp.'s Azure platform, Alphabet's Google Cloud and IBM.