Google Inks a Cloud Deal With SpaceX

Google Inks a Cloud Deal With SpaceX

SpaceX Readies Internet Service

Google (GOOGL) has inked a cloud computing deal with SpaceX to help the aerospace company deliver internet via its Starlink satellites. This is an important victory for Google as it works to capture market share from Amazon (AMZN) and Microsoft (MSFT) in the red-hot cloud computing industry.

Google will supply SpaceX with computing and networking resources to deliver fast internet to companies later this year, while SpaceX will install ground stations at Google data centers to connect with the Starlink satellites. This is not a typical cloud computing deal because it will rely heavily on Google’s internal network instead of just outsourcing data storage or computing.

Google’s Strategy

Google has been trying to grow its cloud unit and diversify as revenue growth from its advertising business slows. Cloud revenue only accounted for 7% of Google parent Alphabet’s overall sales in the first quarter, but cloud revenue grew close to 46% year-over-year. Meanwhile, the company’s advertising unit reported 32% growth. Google’s deal with SpaceX could last up to seven years.

Much of Google’s cloud growth comes from providing computing and storage to customers including Snap (SNAP) and Goldman Sachs (GS). The SpaceX deal is focused more on its networking abilities.

Microsoft’s Partnership With SpaceX

Google is not the only company providing SpaceX with cloud services. Its rival Microsoft has been working with SpaceX since the fall to connect Starlink satellites with Azure cloud data centers. There are currently 1,500 Starlink satellites in orbit and more than 500,000 people signed up and waiting for SpaceX’s internet service.

SpaceX is trying to bring high-speed internet to all corners of the world. Now that the company has the help of both Microsoft and Google, its plans are closer to becoming a reality.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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