‘Cloud giants invest in customers for market share’

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Public cloud providers such as Microsoft, Google, and Oracle use a new tactic to increase their public cloud market share. The Wall Street Journal reports that the organizations invest in potential customers and oblige them to use their public cloud environment for a set period of time.

The battle for public cloud service market share is heating up. Various providers, including Microsoft Azure, Google Cloud, and Oracle Cloud, employ a new strategy to capture market share. The strategy involves investing in potential customers, whom they contractually oblige to purchase their public cloud services.

Simply put, the ‘customers’ are paid or acquired for the purpose of boosting sales and user numbers. The practice was reported by the Wall Street Journal, which notes that AWS — the largest of them all — refrains from the practice.

The reason for buying customers is clear. The cloud providers want to boost their market share. If organic growth is insufficient, creative methods are used.

Google on the move

According to the Wall Street Journal, Google particularly invested in customers to increase its public cloud market share over the past year. In one case, Google invested an unknown amount in the CME Group. In return, it received multi-year cloud contracts with a total value of about 884 million euros ($1 billion). The practice is said to be especially embraced by Google’s current CEO, Thomas Kurian.

Google also invested in companies Univision Communications and AI startup Tempus in 2021. The latter company switched from AWS to Google Cloud and committed to spending over 17 million euros ($20 million) on Google Cloud services.

Microsoft

Furthermore, Microsoft allegedly invested heavily in companies to grow its Azure public cloud over the past year. Mostly startups, which move to Azure upon acquisition. Well-known investments include those in food distribution startup Grab and automotive startup Cruise.

Market shares increase

Partly due to its ‘investment policy’, Google now has a 6 percent market share in the global public cloud market. Microsoft stands at 20 percent. AWS still holds 41 percent.