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Snap looks like it’s Google Cloud’s biggest customer

The soon-to-IPO company is on the hook for $400 million a year with Google — equal to the search giant’s estimated 2015 cloud revenue.

Snapchat's Imran Khan speaks onstage at the Storytelling in the age of Snapchat panel at The Town Hall during 2016 Advertising Week New York on September 26, 2016 in New York City. Slaven Vlasic / Getty Images for Advertising Week New York

Snap Inc. is one of Google’s biggest cloud customers. The question is, just how big?

The startup, which has filed paperwork for an IPO, signed a $2 billion contract with Google last week that pays the search giant $400 million a year over the next five years.

That annual payment is roughly equivalent to the entire revenue Google’s cloud division was expected to bring in for 2015, as reported by The Information last July.

At the time, Snap’s business accounted for about 10 percent of Google’s $400 million cloud business, or about $40 million. If those figures are accurate, Snap’s cloud costs will have increased tenfold in two years.

If Google’s cloud business jumped by the same rate, that would put revenue from the line of business at $4 billion. That’s a big jump, but still a far cry from Amazon Web Services’ roughly $10 billion* in revenue.

RBC Capital previously reported an estimated run-rate revenue of $1 billion for Google’s cloud business, according to analyst Mark Mahaney.

But if Google hasn’t matched that growth rate, then Snap’s value to the search giant has only increased — it’s not only paying more, it accounts for a bigger part of Google’s cloud sales.

Google declined to comment for this post. If you have any insight, we’d love to chat. This reporter can be reached at tess@recode.net.

*Updated figure: AWS reported $12.2 billion in sales in 2016.

Additional reporting by Kurt Wagner.


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This article originally appeared on Recode.net.

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