Report: Google Frontrunner as PayPal Shops for Cloud Services

PayPal is shopping for cloud services, and Google has emerged as the frontrunner, ahead of market leaders Amazon and Microsoft, as the online payments giant weighs its options, CNBC reported citing anonymous sources.

Winning the PayPal cloud deal would give a major boost to Google’s recent effort to prove itself in the cloud services market, where it has been trailing far behind Amazon Web Services as well as Microsoft Azure in terms of revenue. Closing marquee customers is one way to make the case that Google is a serious opponent to the other two giants.

Other well-known customers of Google’s cloud services include Best Buy, Coca Cola, Domino’s, HTC, zulily, and most recently Spotify.

PayPal recently made a substantial investment in a private cloud in its own data centers, replacing VMware-based environments with a private PayPal cloud built using OpenStack, the family of open source cloud infrastructure software.

Read more: Why PayPal Replaced VMware With OpenStack

Using public cloud services by Google or any other provider wouldn't spell the end of the private PayPal cloud or of PayPal's own data centers, the CNBC report said, although it did not point to a source for this information. Some companies move to the cloud completely and shutter most of their own data center capacity, while others adopt a mixed model, often referred to as hybrid cloud. There have been examples of both.

Salesforce recently inked a major cloud deal with AWS but said it would use Amazon’s cloud to speed up service roll-out in new markets while continuing to operate its own data centers. In fact, it recently acquired a data center management technology startup called Coolan, whose founder said his team would help Salesforce fine-tune its data center strategy.

Netflix is an example of a more wholesale move to the cloud. The company has transitioned nearly all of its infrastructure to AWS. The only piece it still keeps in colocation data centers around the world is its content delivery network.

With about 70 percent market share, AWS made about $7.88 billion in revenue from its Infrastructure-as-a-Service alone in 2015, according to Structure Research. Microsoft’s $1.2 billion made it a distant second. Google was sixth in terms of IaaS revenue ($281 million) and market share (2.5 percent), below Rackspace, IBM, and Alibaba, in that order, according to the market research firm.

Read more: Top Cloud Providers Made $11B on IaaS in 2015, but It’s Only the Beginning