In the battle for cloud computing market share, Google and its competitors use a new weapon: large-scale investments in enterprises that agree to use their services.
After a long stint at Oracle Corp., Thomas Kurian has been serving as chief cloud executive since 2019. The Alphabet Inc. company has been dipping into its $142 billion cash reserve to make it more appealing to consumers. Over the last year, Google has taken equity positions in Univision Communications Inc. and CME Group Inc., resulting in multi-year commitments to its cloud service for $1 billion or more.
The agreements make Google among the most aggressive of many large corporations aiming for a piece of the cloud market leader, Amazon.com Inc. Microsoft Corp. has also taken interests in several companies in exchange for using its cloud. Oracle attempted to buy a majority stake in TikTok last year as part of a deal to have the China-owned social media app utilize its cloud service. This month, it cited the boost to its cloud business in announcing its largest deal ever, the planned $28.3 billion acquisition of medical-records company Cerner Corp.
The new strategy has helped Google increase its market share in a vast and quickly growing industry critical to its future success. Google currently has a 6% share of the cloud market, up 1% from a year ago, but it still trails Amazon, which has 41%, and Microsoft, which both have 20%.
“No one wants to do this ‘buying’ customers, but if you’re No. 3 or 4, you have to be creative.”Holger Mueller, an analyst at Constellation Research Inc.
Customers of various sizes and industries have benefited from Google’s deals. In one year, Google has invested $1 billion in the futures-exchange company CME Group, $450 million in the home security provider ADT Inc., and unknown sums in the Spanish-language media firm Univision and the healthtech startup Tempus Labs Inc.