- Pinterest will have to pay Amazon Web Services at least $440 million for cloud services usage over the next four and a half years to reach its minimum commitment.
- The disclosure in its IPO prospectus comes after Lyft said it’s spending at least $80 million a year with AWS.
Every day, Pinterest processes and stores tons of food pictures, vacation images and videos using Amazon’s cloud. Now we know how much all of that work costs.
In its IPO filing on Friday, Pinterest said that it’s committed to spending at least $750 million on Amazon Web Services over the course of a six-year period that ends in July 2023. As of the end of last year, the remaining obligation was $441.1 million, which works out to almost $100 million a year.
But Pinterest has been spending more than that, shelling out $190 million on AWS in 2018, the Information reported in February.
The disclosure highlights how reliant emerging companies are on public cloud services, which are provided by Amazon as well as Microsoft and Google. Ride-hailing company Lyft said earlier this month that it will have to spend at least $300 million on AWS over three years, and a minimum of $80 million each year, and Snap, which went public in 2017, committed to spending $1 billion on AWS and $2 billion on Google’s public cloud over the course of five years.
AWS is the dominant cloud infrastructure service, with annual revenue in excess of $25 billion. Pinterest said in the filing that it’s currently “required to maintain a substantial majority of our monthly usage of certain compute, storage, data transfer and other services on AWS.”
Pinterest’s agreement with AWS has an unusual provision, which allows the agreement to be ended if the company is acquired.
Pinterest said it can’t “terminate the agreement until the minimum spend commitment is satisfied, other than termination only under certain additional conditions (such as the other party’s material breach or acquisition of us by another cloud services provider).”
Amazon isn’t just a technology supplier to Pinterest — it’s also a competitor. In its section on competition, Pinterest highlights Amazon and Google as part of a group of larger rivals, many of whom “have significantly greater financial and human resources.”