Snap Committed to Spend $1 Billion on Web Services With Amazon

  • Amount is in addition to $2 billion with Alphabet’s Google
  • Snap may eventually invest to build its own infrastructure

Is the Timing Right for Snapchat Maker Snap's IPO

Snap Inc. has a deal to pay Inc. at least $1 billion for internet services over the next five years, adding to a $2 billion agreement it already has with Alphabet Inc.’s Google.

Details of the deal were released Thursday in an update to Snap’s initial public offering documents. Snap will pay Amazon $50 million in 2017 and then spend progressively more on the e-commerce giant’s cloud and infrastructure services through 2021.

Snap outsources the heavy-lifting of data storage to outside companies rather than building its own server warehouses. Splitting the work between Google and Amazon decreases the company’s reliance on a single company. The filing also states Snap could still build its own infrastructure.

Snap, a photo and video-sharing app popular with teens and millennials, filed for an initial public offering last week. The company is seeking a valuation of as much as $25 billion.

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