Google and Microsoft have turned to a new strategy which has seen both companies make big investments in other businesses in an effort to bolster their cloud market share and better compete with AWS.
After replacing Diane Greene as the CEO of Google Cloud back in 2019, Thomas Kurian hasn’t been afraid to tap the company’s $142bn cash reserves to attract more customers to the service. In fact, Google has made sizeable investments in the business security system provider ADT ($450m), the Spanish-language media company Univision, the healthtech startup Tempus Labs and the futures-exchange firm CME Group ($1bn).
These investments are part of Google Cloud’s larger strategy to bring more customers to its platform and so far, they have already started to pay off with many companies making multiyear commitments to use its cloud services which are worth as much as $1bn or more according to a new report from the Wall Street Journal.
However, Google isn’t the only cloud computing provider trying to grow its market share through investments as Microsoft has taken stakes in several startups in deals that would see them use its cloud while Oracle’s planned $28.3bn acquisition of the medical-records company Cerner has led to a significant boost in its own cloud business.
Investments to gain cloud market share
This new strategy of making strategic investments to bring businesses to its cloud seem to be working for Google as it now has six percent of the cloud market (up by one percent last year) though the company is still far behind Microsoft with a 20 percent share and the leader in the space, Amazon with a 41 percent market share.
In a statement to the Wall Street Journal, a Google Cloud spokesperson admitted that investments and partnerships in other businesses are one of the ways the company is trying to bring more customers to its cloud though it has attracted many on its capabilities alone.
Microsoft is employing a similar strategy and one of its biggest investments so far has been a stake in General Motors’ driverless-car startup Cruise which will use Microsoft Azure to roll out its autonomous vehicle services. Not to be outdone, Google then took part in a $200m investment round for the startup Tempus which uses AI to improve patient care.
Even as both Google and Microsoft try to gain ground in the cloud wars, recent AWS outages have shown that more competition in the space can benefit businesses, governments and even consumers.
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Via Wall Street Journal