- Google Cloud just opened a new facility in Salt Lake City, home of the "Silicon Slopes," a nickname it earned after attracting the likes of Adobe and PayPal to open data centers and offices in the Salt Lake valley.
- By the end of 2020, PayPal aims to move 25% of its total transaction volume processing onto Google's public cloud, leveraging the new Salt Lake City facility.
- Processing transactions on the cloud, as opposed to on-premise servers, can help PayPal reduce costs.
- As it adds regional facilities, Google Cloud hopes to grow its customer base, competing with larger players in the field like Amazon Web Services and Microsoft Azure.
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Google Cloud just opened a new facility in Salt Lake City in hopes to grow its customer base as it competes with larger players in the field like Amazon Web Services and Microsoft Azure.
Salt Lake City is home to what's been called the "Silicon Slopes," a nod to the tech firms like Adobe and PayPal who have set up data centers and offices in the mountain-lined city.
The move is part of the Google Cloud Platform's (GCP) larger geographic growth strategy, Jennifer Chason, director of Google Cloud, told Business Insider. Salt Lake City will be the 22nd global location for the GCP.
"We've obviously got a huge focus on our enterprise customers across multiple verticals," Chason said. "Thinking of financial services, retail, healthcare, manufacturing."
Google Cloud offers its customers cloud-based data storage, security and fraud prevention, and artificial intelligence and machine learning capabilities for things like customer service and recruiting.
Google arrives in the "Silicon Slopes"
Over the past several years, Salt Lake City has been eager to establish itself as the next tech hub of the west.
Offering tax incentives to companies who set up offices and create jobs, it's attracted tech giants like Adobe and LendingClub, e-commerce players like Overstock.com, Wall Street firms like Goldman Sachs, and government agencies like the NSA.
And now, Google.
"The growth here in this market is phenomenal," said Chason. "The types of customers that are investing and bringing people in and recruiting is something that we're not seeing in all of the other regions."
And the city's tech scene, Chason said, is a large part of the reason Google chose Salt Lake to open its latest facility.
"There's a level of prioritization about when we open these regions, knowing that we've got customers who want to take advantage from day one," Chason said.
In addition to PayPal, GCP counts Utah-based Overstock.com and biopharma startup Recursion as local customers.
Salt Lake will be Google's sixth US cloud facility. And for Google's West Coast customers, this new facility will provide a third option in addition to Los Angeles and Oregon regions.
"The opening tomorrow of the region here in Salt Lake is a great example of our geo-expansion strategy," Chason told Business Insider yesterday.
And Salt Lake City is just the beginning of Google's investment outside of its West Coast hub. This week, it announced a $10 billion investment in offices and data centers around the US, saying it would focus on 11 states including Massachusetts, New York and Ohio.
PayPal's on board, too
With the opening of the facility, payments giant PayPal announced its will be partnering with the GCP via its new Salt Lake region.
PayPal began testing with the GCP in 2016, and will now aim to run a quarter of its transaction processing on the public cloud.
By the end of 2020, PayPal is aiming to get 25% of its total transaction volume processing onto Google's public cloud, Dan Torunian, a VP of employee technology experiences and data centers at PayPal, told Business Insider.
PayPal has a data center just south of Salt Lake City in West Jordan, Utah.
The draw of the public cloud
For PayPal, running transactions via Google's cloud is more efficient, especially during high volume days like Black Friday and Cyber Monday, Torunian said.
Without the cloud, the payments giant needs to run and maintain servers that are built for the busiest days year-round like Black Friday, and that can be costly. The processing resources of the GCP can be adjusted depending on volume.
"Being able to leverage the cloud allows us to move with more flexibility and more agility," Torunian said. PayPal will be able to upscale the processing power in the cloud on peak days, and wind it down when volumes are more stable, he said.
The Google partnership, Torunian said, would also help PayPal enter new markets.
"It allows us to potentially enter markets now much quicker," Torunian said, "rather than us going into a region and building our own data center or something of that nature."
Torunian wouldn't disclose details on the expected cost differences between cloud-based processing and on-premise servers, but said PayPal feels the cost of using GCP is "very competitive."
PayPal will likely operate in a hybrid cloud model, meaning there will likely be things the payments company wants to keep running on their own servers, said Torunian.
Customer data, for one, will continue to be housed on internal servers, PayPal's CTO Sri Shivananda told Business Insider last November.
"We are thinking as aggressive as we reasonably can as to what use cases make sense to be on public cloud and how to create that path for those use cases," Torunian said.
The cloud wars wage on
The public cloud infrastructure space is crowded, with providers competing for enterprise clients across retail, financial services, healthcare, and other industries.
While Amazon Web Services (AWS) is the leading cloud computing platform on the market, the likes of Microsoft, with its Azure cloud platform, and Google are growing, and competition is heating up.
For example, Amazon was vying for a $10 billion cloud contract with the US Department of Defense.
Microsoft ended up signing the same contract, which resulted in Amazon suing the Pentagon, saying that politics got in the way of fair competition for the contract.
According to Gartner's most recent public cloud report, Amazon has an estimated 48% market share, Microsoft has 16%, and Google as 4%.
But Amazon's rate of growth is half that of Microsoft and Google, which both saw 60% revenue growth from 2017 to 2018, according to the report.
Chason, who joined Google to lead its cloud business last year after about 18 years at Microsoft, said Google's network capabilities and speed of innovation will help it stay competitive.
"Just the speed with which we can innovate is incredible. I really noticed that and actually it was one of the reasons I joined the company," Chason said.
