Google has secured one of its largest-ever cloud-computing contracts, Spanish-language broadcaster Univision Communications Inc., in a deal that shows how the tech giant is leveraging other parts of its operation to drive business to its cloud division.
unit, which announced the deal Monday, beat out rival services by packing its offering with benefits across its YouTube video platform, advertising and search services, according to company executives. The deal value could top $1 billion over its eight-year run, according to a person familiar with the terms.
That empirewide offering was the deal-clincher, Univision Chief Executive
said in an interview. Univision is aiming to turn its U.S. network into a digital platform that reaches Spanish speakers around the world, Mr. Davis said, and working with Google was more attractive than finding a hodgepodge of partners who could meet its needs.
“If I want to buy a car, I don’t want to go buy four wheels and a steering wheel and an engine and doors and try and figure out how to put that together,” he said.
The Univision deal highlights how tech giants grow by leaning on established products to build budding businesses.
Bundles have become a key ingredient as Google and other cloud vendors lure customers.
at times also bundles products in large enterprise cloud deals, often including its Office 365 suite of business applications.
has linked its cloud business with other parts of its operations. WarnerMedia, to get HBO Max on Amazon’s Fire TV, extended its cloud contract with Amazon, people involved in the discussions have said.
Lawmakers have raised concerns about that approach among several of the big companies, saying specifically that Google used its dominance in mapping and other areas to acquire cloud customers. “By harnessing Google’s advantages in existing markets,” the report said, Google’s cloud operation “is undermining competition on the merits.” The report said Congress should clarify existing laws that discourage that practice.
Google Cloud’s CEO, said the company was simply responding to customer needs.
“To say, you can work with us on cloud but not the other platforms, doesn’t make a lot of sense,” Mr. Kurian said in an interview about the Univision deal. The strategy of bundling products is particularly useful in the media industry where companies are looking for other assets such as machine-learning tools that can recommend videos to viewers, he said.
Google has long said it operates in a competitive market and that people use its search service because they choose to, not because they are forced to do so. It currently faces antitrust lawsuits brought by the Justice Department and several states over its online-search and ad-tech businesses. One of those cases accuses Google of using contracts to ensure mobile phones, connected cars and other technologies use its search system, a practice known as tying. Google says its agreements with mobile carriers reduce the prices people pay for phones and allow carriers and device makers to preload their own or other competing apps and app stores.
Google has been eager to turn its cloud business into a more reliable sales contributor as it tries to diversify beyond its core online-advertising business, hiring Mr. Kurian from
in late 2018 to fast-track growth. The company remains a distant fourth to Amazon, Microsoft and
Alibaba Group Holding Ltd.
, according to the latest data from research firm
Google’s market share rose to 5% in 2019 from 4% in the year prior. Amazon was the leader with a 45% share in 2019, with Microsoft at 18%, Gartner said.
Customer announcements have become a sort of game of one-upmanship in the cloud business as service providers try to burnish their credentials. Oracle, which is playing catch-up in the cloud battle, last year bragged after landing
Zoom Video Communications Inc.
as a customer, while Microsoft made a big deal when it landed as a cloud customer
Space Exploration Technologies Corp., or SpaceX. Amazon last week said it had struck a strategic cloud deal with
Dish Network Corp.
around 5G wireless networking.
Last year, Google said it was teaming with videogame company
Activision Blizzard Inc.
in a deal that included cloud for hosting games as well as YouTube becoming the exclusive streaming partner for live gaming events.
Google Cloud sales rose 46% last year to $13.06 billion but the company reported an operating loss for the unit of $5.6 billion because of heavy spending on staff and data centers. Wall Street analysts surveyed by FactSet expect the company on Tuesday to report that cloud sales increased about 47% to $4.1 billion in the March quarter, a small contributor to the expected $51.4 billion in total sales.
The contract with Univision expands Google’s toehold in what has emerged as the most important segment of the cloud market. The rise of streaming TV has turned the media industry into the biggest spender on cloud services, accounting for $12 billion, or 27% of total expenditure in 2019, according to Gartner. The retail industry came second in terms of cloud spending with $7.6 billion that year, said Gartner.
With the multiyear deal, Univision will consolidate multiple distribution platforms onto Google Cloud, and move some of its important internal business applications to Google, the companies said. Univision will also adopt Google’s artificial-intelligence tools to develop personalized content recommendations for its customers. Outside of the cloud, Univision will expand its use of YouTube and adopt Google’s ad platform.
Write to Aaron Tilley at email@example.com and Tripp Mickle at Tripp.Mickle@wsj.com
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