Snap is not only paying Google $2 billion a year for cloud infrastructure, it will also hand Amazon $1 billion for five years of use of its cloud computing service.
According to an amended version of Snap’s IPO paperwork, the money it is shelling out for Google’s and Amazon’s services is necessary for now, although the Snapchat parent company said it may build its own infrastructure in the future. Snap, in the filing, said it relies on Google Cloud to host the lion’s share of its computing, storage and bandwidth.
The filing also touched on user habits outside North America and Europe where cellular networks are slower and much more costly. Snap said these areas require high bandwidth, making users from these countries more interested in reading rather than creating content. Often, that means losing such users to Facebook or Twitter.
Snapchat has 158 million daily active users, the majority of which are aged between 18 and 34.
Snap, which is planning its stock market debut in March, is expected to be valued between $20 billion and $25 billion. Snap has said it hopes to raise $3 billion in additional funding.
Once Snap’s IPO is official, it will be the largest company to go public on a U.S. Exchange since 2014 when Chinese eCommerce firm Alibaba went public with a massive $168 billion valuation.