Clouds over LatAm: The digital giants jostle for position

As Google announces it expects to triple its "customer workforce" we look at what's happening in Latin America's Cloud scene.

"The use of technology is for the development of a country. This is not right or left, it is not politics." - Iván Duque Márquez, President of Colombia, 2019

Clouds are gathering across the economies of Latin America: and for once, this is not a conventional prognostication of gloom for the region. These clouds are digital ones, and LatAm, like the rest of the world, is seeing a huge expansion in their use as businesses, government agencies and other organisations transition their computing activities more and more out of house and into the remote machinery of the world's cloud giants.

Those giants are more present in Latin America each day. President Márquez, making the remark above, was speaking at an event hosted by Amazon Web Services (AWS) earlier this year in Bogotá. AWS has committed to launch an Edge location in the city by the end of 2019, its first South American network access point outside Brazil. It already counts Colombia's chamber-of-commerce confederation Confecamaras and the country's National University as customers and is looking to acquire more.

"With the use of AWS services, the university has achieved tangible benefits in the areas of security deployment and application management not previously seen in traditional IT models," according to Gustavo Adolfo Pérez Pérez, the school's Director of Information Technology and Communication.

Azure, Microsoft's cloud arm, has for its part been operating seriously in Latin America since 2013, when it rolled out its region in Brazil. It benefits from the fact that its parent company has been a global player for decades: Microsoft as a whole has 4,000 employees in the region. Apart from its Azure data centre, it also has a technology centre in Brazil and another in Mexico.

Then there's Google, often seen as something of an underdog among the big three players in traditional or pure cloud services. These are generally grouped under the headings of Infrastructure-as-a-Service and Platform-as-a-Service, IaaS and PaaS. (Other major firms such as Oracle, Salesforce and IBM are also very active in these areas, but analysts typically class them more as Software-as-a-Service operations with their own UX at the user end.) In IaaS/PaaS cloud revenues for 2018, AWS made more than $25bn; Azure $11bn; and Google Cloud Platform $8bn. These figures are somewhat arbitrary as all three companies do huge amounts of other online business, much of which could easily be classified as ‘cloud', but nonetheless the general AWS-Azure-Google ranking is probably about right.

Google arrives … but it's always been here

Despite being number three worldwide, Google's Cloud Platform could well lay claim to having the most resources in Latin America. Like AWS and Azure, its network is centred in São Paulo but it has two data centres in Chile and four Edge locations outside Brazil: in Santiago, Buenos Aires and two in Bogotá. Within Brazil it has five Edge points in São Paulo and another in Rio. These are backed by CDN caches in all the same cities.

Then there's the network backbone. All the cloud majors are heavily involved in fibre backbone around the world, but in Latin American fibre Google is the main non-telco player. By Q2 2020 it expects to have its own Curie submarine cable operational between Valparaiso, Panama and Los Angeles, hooking in its two Santiago data centres. On the east coast, Google has ownership in the Monet, Junior and Tannat cables, extending south all the way to Buenos Aires and Uruguay, and the search giant also has private lines across the continent from there to Chile.

All this, perhaps, makes it a little surprising that Google Cloud only launched a South American cloud region (based in São Paulo) in 2017, several years behind its rivals. However, Google's cloud business is only a small part of its enormous $100bn global operations: it would need a powerful worldwide content delivery network anyway for doing other things such as serving YouTube videos.

The arrival of GCP's São Paulo region was not before time, according to some customers. Brazilian firm Movile offers food delivery, event tickets, courier service and its own video service for kids. It's thought possible by some tech watchers that it might mutate into a Chinese-style "super app" along the lines of WeChat, offering so many services that its users might seldom require any other platform. Movile ops manager Flávio Tooru commented:

"The majority of our clients and partners are in Brazil. The launch of the Google Cloud Platform region in São Paulo will reduce the latency of its products." Tooru added that this would "take down the last barrier" to using the Google Cloud for services interfacing with Movile's clients.

We will TRIPLE our Latin customer workforce

The digital giant certainly seems determined to make the maximum possible use of its vast resources, and that includes selling cloud services along with the rest. Last month Google announced that it expects to triple the Latin American Cloud Platform "customer workforce" by the end of next year, though it didn't specify any actual numbers of jobs.

This revelation was made at the Google Cloud Summit in São Paulo by local Google Cloud chief João Bolonha. According to Bolonha:

"This growth has already started and we've been expanding teams in Brazil, Mexico, Chile, Argentina, and Colombia."

Bolonha added:

"Inside Latin America, Brazil is our largest market in cloud computing and the one with the fastest growth. Customer consumption of cloud computing solutions rose over 300 percent in 2018."

According to Bolonha, less than 20 percent of companies in Brazil are employing cloud computing services in their operations today, suggesting that there is still a lot of space for expansion almost regardless of competition from AWS, Azure and the rest. Reportedly the Google executive did remark that competition is fierce in some sectors, specifically mentioning retail, but that's to be expected. AWS has retail in its genes, and it's also the case that retail has been one of the classic ways to actually make some money on the internet, in other markets as well as Latin America. MercadoLibre, the e-commerce giant sometimes seen as the Amazon of LatAm, today enjoys market valuation of no less than $29bn on stock prices that have climbed rapidly in recent years.

Bolonha's figures sound promising, but Google's network resource muscle may not translate to Latin cloud dominance any more than it has elsewhere. Microsoft sales executives commonly suggest that Azure is doubling its Latin business annually, and AWS is similarly upbeat. Given that Google in general prefers to avoid human-to-human interaction with its customers altogether, a tripling of cloud customer workforce across LatAm may not, in fact, amount to a particularly big move for the company. When Google Cloud launched in São Paulo it told would-be customers to contact local partners, not its own staff.

One thing does seem clear. As more and more organisations are embracing cloud computing, the global cloud market continues to expand massively. Reportedly, the global cloud market was worth $182.4bn in 2018, and analyst house Gartner estimates that the revenue opportunity will climb past $331bn by 2022. Meanwhile cloud adoption in regions such as North America, Europe and much of Asia-Pac is already well advanced, meaning an increased focus on areas such as LatAm where, proportionally, more new business is to be done.

Almost regardless of what happens to world and regional economies, Latin cloud will be a hot business opportunity in coming years.