Snapchat’s Cloud Doesn’t Have a Silver Lining
A decision to outsource its computing services instead of building its own network is a big reason Snap is bleeding so much cash.
Popular and expensive go hand in hand.
Photographer: Krisztian Bocsi/Bloomberg
Snap Inc. has been through a rocky 19 months as a public company, with shares ending Wednesday’s ugly market day at an all-time low, about 60 percent below its IPO price, before recovering some on Thursday morning. Among Snap’s myriad problems is a wrong-way bet on cloud computing.
Snap was perhaps the first big public internet company that was born in an era of reliable cloud-computing providers such as Amazon Web Services. Snapchat’s parent company has contracts with both Amazon.com Inc. and Alphabet Inc.’s Google to ensure every dog-ear selfie and video diary created by the app’s users pings smoothly among the world’s smartphones. Few other companies of Snap’s size have gone the route of outsourcing most of their computing needs to cloud services.