Snap Inc. and the Brave New World of Internet Centralization

Snap Inc., one of the highest valued tech IPOs of the last decade, is built on cloud infrastructure from Amazon and Google. It has committed $2 billion to Google Cloud Services and $1 billion to Amazon Web Services over the next five years. This is a tech company that has outsourced a large portion of their tech and it makes me fear for the future of the internet. I don’t blame Snap at all, Google Cloud and AWS are excellent products that has allowed Snap to reach millions of users without significant up front costs associated with building out an entire backend infrastructure form scratch. It is also very possible that like Dropbox, Snapchat will wean themselves off an external infrastructure and take it all in house. But I suspect that over the course of the next decade it will become increasingly difficult from both a technological and cost perspective for companies to build their own infrastructure that can compete with Google Cloud, AWS, and Microsoft Azure. On top of this, solutions like Google’s Firebase, which I expect to become even more popular and even more advanced, ensure the switching costs are even greater because these types of solutions supply more than just computing primitives like storage or computation. These types of solutions force your software to comply with a very specific API, making switching infrastructure even more difficult. Does this mean we will be left with three companies that control the vast majority of internet traffic? I think yes. Though there are other companies like Cloudflare that are increasingly expanding their infrastructure, economies of scale and the moment behind Google, Amazon, and Microsoft make me think this game is already over. The only way unseat these behemoths is to change the game. Maybe it’s blockchain, maybe it’s something else. One thing is for sure, it’s a brave new world.

Originally published on no gradient.