Technology

Snap Inc to pay Amazon $1 billion for its cloud services

Snap Inc is expected to pay $1 billion to Amazon for using its cloud services over the next five years, other than the $2 billion cloud deal it already has with Google, according to a recent statement from the company.

Owner of the famous Snapchat app said that it may ultimately invest in developing its own infrastructure. The company currently relies on Google Cloud to host most of its storage, bandwidth and computing.

The Venice, California-based company said in a filing that expensive and slower cellular networks outside North America and Europe have limited the use of its app that needs strong bandwidth. This means users outside these two regions are more interested in consuming content rather than creating it, which makes them easier target for rivals, Snap added.

The company’s popular app Snapchat, which was launched in 2012 and enabled users to send images that disappear after few seconds, mainly competes with Facebook’s Instagram for users.  Snapchat has over 100 million active users and about 60 percent of them are millennials, making the app attractive for advertisers.

The company filed its initial public offering registration statement one week ago and is planning to raise $3 billion. The expected value of Snap could be in between $20 billion and $25 billion.