Cloud giants invest in customers for market share

Public cloud service providers such as Microsoft, Google and Oracle are using a new tactic to increase their share of the public cloud market. They invest in potential customers and then oblige these companies to use the relevant public cloud environment for a certain period of time. This is reported by the Wall Street Journal.

The battle for market share in the market for public cloud services is currently very fierce. The various providers, including AWS, Microsoft Azure, Google Cloud, Oracle Cloud and other providers, are trying to capture as much market share as possible in this segment.

Parties such as Google Cloud, Microsoft and Oracle now seem to have developed a new strategy for this report the Wall Street Journal. They invest in potential customers whom they then contractually ‘obligate’ to purchase the public cloud services from them. In simpler terms, these cloud giants are “buying” customers. AWS – the largest of them all – has yet to refrain from this practice.

The reason for this ‘buying’ from customers is obvious. In this way, the cloud providers want to gain market share from the absolute market leader AWS. If organic growth cannot do this, other “more creative” methods must be employed, according to the Wall Street Journal.

Google on track with ‘investments’

Research by the business newspaper shows that Google in particular has invested heavily in companies in the past year to increase its public cloud market share. For example, Google invested an undisclosed amount in the CME Group. For this, it received multi-year cloud contracts with a total value of approximately 884 million euros (1 billion dollars). Investing in customers to increase the public cloud business is especially embraced within Google by current CEO Thomas Kurian.

In 2021, Google also invested in companies such as Univision Communications and the AI ​​startup Tempus. The latter company switched from AWS to Google Cloud and committed to spend more than 17 million euros (20 million dollars) on Google Cloud services. Investments were also made in the company ADT.

Microsoft and Oracle

Microsoft has also invested heavily in companies in the past year to grow its Azure public cloud, the business newspaper reports. This mainly concerns startups that will subsequently use the Azure cloud. Notable investments include those in the food distribution startup Grab and the automotive startup Cruise of automaker General Motors.

Oracle also indicates that it is investing in further expanding its public cloud activities. Think of the takeover of the social media platform TikTok.

Market shares increased

Due to the ‘investment policy’, Google now has a 6 percent share of the global public cloud market and Microsoft 20 percent. AWS still owns 41 percent. It is not known what percentage Oracle holds. It is in any case lower than that of the three other parties.