Snap already has a $2 billion contract for Google’s cloud services. The $1 billion it plans on spending on Amazon’s cloud services is in addition to its Google cloud service commitments. Eventually, Snap plans on investing in its own data centre for cloud services.
Snap Inc, the owner of the Snapchat app, has disclosed that as per its revenue forecast it will be spending $1 billion spread across 5 years on Amazon.com’s cloud services. This is in addition to the $2 billion cloud service contract it has with Google.
Snap has further revealed in an amendment related to its planned launch of its IPO in March that it may eventually invest in its own cloud service infrastructure.
Snap, likely to be valued in the range of $20-$25 billion, has filed its IPO registration a week earlier is looking to raise $3 billion. The company’s valuation is the biggest since Facebook hit the primary market with its IPO.
Snap currently relies on Google’s Cloud service for the vast majority of its bandwidth, storage and computing needs.
Significantly, Snap has added details in its filing which state that slower and more expensive cellular networks outside Europe and North America have limited the use of its app since it requires sizeable bandwidth.
This essentially means that users in other than these two countries are more interested in consuming content than creating it, which makes them easier targets for Snap’s competitors, disclosed the company.
Snap’s market competitors include Instagram, Facebook and Twitter. Its free mobile app allows users to send photos that vanish within seconds.
“Fewer Snaps and Chats sent means fewer notifications inviting friends back into the application and therefore lower and more sporadic daily use,” said Snap in its filing.
With more than 100 million active users 60% of whom are aged between 13 to 24, Snap’s userbase makes an attractive target for advertisers.