Spotify will spend nearly $450 million on Google's cloud over 3 years

Key Points
  • Spotify said in a filing that it will spend at least 365 million euros ($447 million) on Google's Cloud Platform in the first three years of a new service agreement.
  • Snap said last year that it had committed to paying Google $2 billion for cloud services over five years.
Daniel Ek, CEO and Founder of Spotify.
Getty Images

Spotify is committed to spending close to half a billion dollars on Google's public cloud services over the next three years, the music streaming service disclosed on Tuesday.

According to its updated share sale prospectus, Spotify signed a deal earlier this year to spend a minimum of approximately 365 million euros ($447 million) on the Google Cloud Platform during the first three years of the service.

Last month, when it initially filed to go public, Spotify said it was moving more data to Google's cloud, but the company didn't say how much it was paying for those resources.

Google's cloud business has grown in the past two years under the leadership of CEO Diane Greene and now brings in more than $1 billion per quarter. Amazon Web Services still leads, generating more than $5 billion in revenue in the fourth quarter, and Microsoft pulled in more than $5 billion in revenue, though that category includes the Azure public cloud as well as services like Dynamics 365 and Office 365 business subscriptions.

The Spotify relationship is big for Google Cloud, but Snap is bigger.

Last year Snap said it would spend $2 billion over five years on Google public cloud services, or about $400 million per year. In other words, Snap is contributing as much as 10 percent of the $1 billion or more that Google is getting on a quarterly basis.

Using the current exchange rate, Spotify will be paying Google around $149 million per year, or $37.25 million per quarter. That works out to about 3.7 percent of Google's quarterly cloud revenue figure.

Before adopting Google cloud, Spotify was a prominent AWS customer. A Spotify case study is still listed on the AWS website.