Google And Oracle Sign Cloud Deals With Uber

It will be the last time a ride-hailing company will rely heavily on its own data centers as the result of two seven-year deals.

‍

In a Monday announcement, Alphabet Inc. and Oracle Corp. said Uber Technologies Inc. would move its information technology to their cloud computing platforms.

‍

During the past few years, Uber has struck two seven-year contracts, one with Google Cloud and the other with Oracle, which will enable it to dump its own data centers, said Kamran Zargahi, Uber's senior director of technology strategy. The data centers that house Uber's IT currently house over 95% of the company's technology.

‍

A value estimate for the deals was not provided by the companies. In response to a question about how Uber plans to spread its data between Google's cloud platform and Oracle's cloud platform, Uber declined to comment.

‍

It differs from its peers in the technology sector in that Uber primarily relies on its own server hardware instead of the cloud since its founding in 2009, said International Data Corporation senior vice president and analyst Matthew Eastwood.

‍

According to Mr. Zargahi, the tipping point was reached during the Covid-19 pandemic, when disruptions in supply chains pushed back the timing of delivering IT hardware to more than 12 months as a result of disruptions in supply chains. By utilizing a cloud provider, Uber will be able to lessen its reliance on the hardware supply chain, the statement said, and the company can also make use of the cybersecurity controls that cloud providers offer and comply with certain privacy standards in order to protect data.

‍

The company has also reevaluated its workforce in response to the need to focus on skills such as artificial intelligence and away from legacy technologies, as some companies are doing in this way. Mr. Zargahi stated Uber’s engineers wanted to shift from managing data centers to “the areas where our product is differentiating itself” and to supporting its cloud deployment, rather than managing data centers.

‍

Despite greater restrictions on IT budgets and a broader shift across industries, several large companies have become more often reliant on the cloud, despite a broader shift that spans industries. 

‍

There have been eleven months that Uber has been looking for cloud partners, and beginning in November last year, the company started searching for multiple providers as a way to mitigate the risks of relying on one provider and to take advantage of "areas of super expertise," according to Mr. Zargahi. 

‍

It has been known for some time that Uber and Google have already partnered, however the new cloud agreement offers the two companies a chance to work together in other areas such as launching new services, said Thomas Kurian, the Chief Executive Officer of Google Cloud. Among the services that Uber plans to utilize from Google include its mapping service to help guide its vehicles, and its advertising service to start up a business to sell ads to customers, according to Mr. Kurian.

Kurian said that after moving these apps and data to the cloud, they can take advantage of data analytics and machine learning capabilities provided by our platform, which will also enable them to provide better insights to customers.

‍

When these applications are moved to the cloud, they will be able to bring our platform capabilities paired with our data analytics platform, BigQuery, and machine learning to create both better insights and new experiences for customers based on these new insights." more than just, ‘Here’s some infrastructure,’” Mr. Magouyrk said. “It’s a lot about partnering together to push multi-cloud forward.”

‍

Sid Nag, a vice president and analyst at Gartner Inc., says Oracle’s cloud reputation is boosted by the addition of customers such as Uber, which is mainly known as enterprise database and software. With 7.1% market share, Cloud computing provider Google Cloud lags behind cloud computing leaders Amazon.com Inc. and Microsoft Corp., which hold 38.9% and 21.1%, respectively. Gartner's most recent estimates show Oracle trailing each of the three behind by a wide margin.

‍

The cloud can still represent an opportunity for companies to reduce their costs, despite the fact that they have recently pulled back on investments in IT as a result of economic uncertainty, according to Nag. This can especially be seen as compared to running a data center, In his opinion.

‍

Based on filings made to the Securities and Exchange Commission regarding Uber's 2019 initial public offering, Uber spent $221 million on rent and utilities expenses in 2018. Zargahi said as Uber moves towards the cloud, it expects to find that it will cost less than managing its data centers over the long run, with the company not renewing some data center leases in the process.

‍

For the three months through December, the company reported $8.6 billion in revenue, a 49% increase from the same period last year, but the recession and inflation fears could affect consumer spending.

‍

Ultimately, everyone is trying to maximize profits by trimming internal costs, said Nag. "A company like Uber had to experience this outcome eventually. It was inevitable that they would do this."