In a situation nearly every company will face, one of the Internet’s brightest stars has highlighted the value of not getting locked into a single cloud computing provider. Snap Inc., creator of the messaging app Snapchat, recently revealed that it will spend $1 billion over five years on Amazon Web Services and may eventually build its own infrastructure.
The move will provide “redundant infrastructure support of our business operations,” Snap said in an amended S-1 registration statement for its initial public offering of shares. Snap’s first filing spurred headlines, in part, because it disclosed how closely Snap’s fortunes are tied to Google Inc.’s cloud, on which it said it would spend $2 billion over five years. In both filings, Snap said it relies on Google Cloud for the “vast majority” of its computing, storage, bandwidth and other services, and that “any disruption of or interference with our use of the Google Cloud” would “seriously harm our business.”
Here’s the scariest part: “Any transition of the cloud services currently provided by Google Cloud to another cloud provider would be difficult to implement and will cause us to incur significant time and expense,” Snap said. It also warned, “If our users or partners are not able to access Snapchat through Google Cloud or encounter difficulties in doing so, we may lose users, partners or advertising revenue.”
It’s pretty clear that giving the bulk of its cloud services to a single supplier is a huge risk to Snap. The company is, as The Information recently noted, “the biggest consumer Internet company to be built from scratch on top of cloud computing infrastructure it doesn’t own.” It also reported that Google is giving Snap deep discounting and other benefits.
Discounts are enticing, but cloud lock-in is a risk to Snap’s operations and economics. By warning that it may build its own infrastructure, Snap could keep its cloud suppliers honest. But that has meaning only if Snap can quickly and seamlessly transition its information technology operations from one cloud provider to another or to its own infrastructure. Cloud neutrality in what Snap builds, how it builds it and how the company runs its systems will have to be a key attribute of its daily development operations if Snap is going to benefit from a cloud neutrality strategy.
This risk is not unique. By 2020, all companies will be doing something in the cloud. The cloud vendors, led by Amazon Web Services, Microsoft Corp. and Google, will want to run and manage their customers’ capacity and may even extend discounts for volume.
For now, that may not seem like a bad deal. For many enterprises, the cloud is mostly about fundamental services, such as storage and elastic compute capacity. The underlying architecture is standardized around Intel hardware and Linux, which works in any cloud environment.
