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May 9, 2022

Google Cloud creates web3 unit to outpace AWS and Azure

Google Cloud is planning to build Web3 tools for developers, in a bid to get ahead of its cloud rivals.

By Matthew Gooding

Google Cloud is recruiting a team to build tools for developers working on web3 products and services. The new group will aim to capitalise on opportunities presented by the growing interest in blockchain-based apps as Google looks to get ahead of its public cloud rivals, Amazon’s AWS and Microsoft Azure, in another emerging technology area.

Google Cloud is launching a new business unit focused on web3 technologies. (Photo by Adam Berry/Getty Images)

By establishing the web3 unit, the company aims to make its Google Cloud Platform the number one choice for developers in the field, according to an internal email that Amit Zavery, a vice president at Google Cloud, sent to staff on Friday. In the email, seen by CNBC, Zavery said: “While the world is still early in its embrace of web3, it is a market that is already demonstrating tremendous potential with many customers asking us to increase our support for web3 and crypto-related technologies.”

Headed by James Tromans, an executive who has been with Google since 2019, the new team will offer back-end tools to developers working on their own web3 projects. “We’re not trying to be part of that cryptocurrency wave directly,” Zavery said in an interview with CNBC. “We’re providing technologies for companies to use and take advantage of the distributed nature of web3 in their current businesses and enterprises.”

Why is Google investing in web3?

Web3 is the idea that the next generation of the internet will be built on distributed blockchain technology where users have more control over their information. This is often contrasted to web 2.0, the era in which online data has become centralised with a small group of tech firms, including Google and Amazon.

Google has been looking to shore up its position in any decentralised future of the internet. In January, Tech Monitor reported that the search engine giant had set up a blockchain unit within its labs to look at building decentralised systems for its own internal use.

The fact it is willing to invest in an emerging technology also speaks to Google Cloud’s place in the public cloud market, says Roy Illsley, chief analyst at Omdia. It is the third-largest player in the space with a 10% market share, but is a long way behind AWS (33%) and Microsoft Azure (21%).

Illsley says Google Cloud has enjoyed some success offering clients access to emerging technologies, and blockchain could be another such area. "[Google Cloud] has some strengths in the newer technologies that have proved useful to them, such as artificial intelligence, machine learning and Kubernetes," he says. "It has struggled with more traditional workloads and winning a larger share of that cloud market. Therefore, it is not surprising that they invest in new emergent technology as eventually, these technologies will become the mainstream."

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Indeed, interest in web3 is growing amongst developers. According to research undertaken by VC fund Electric Capital, 2021 saw more new developers start web3 projects than ever before. Its developer report analysed more than 500,000 code repositories and notes the number of developers starting web3 projects last year reached 34,391, 14% more than the previous record year, 2018.

Will AWS and Microsoft Azure invest in web3?

While both AWS and Azure offer users a limited range of blockchain tools, neither has invested heavily in the technology. Illsley says it remains to be seen if decentralisation will be key to the future of the internet, so Google's investment is somewhat speculative. "Google is trying to get ahead of the game and position itself as the platform of choice for web3, but I think it is too early to say if it will become a well-adopted technology, or if it will remain a specialist offering," he says.

Bola Rotibi, director of developer trends at analyst firm CCS Insight, is more confident web3 and decentralised technologies are here to stay. "We're starting to see a level of maturity for blockchain, particularly around financial services," she says. "This is Google making a judgement call that this technology isn't going to go away, and the advent of things like the metaverse means the use of this kind of technology for identity and security purposes is only going to get bigger."

She says she expects both AWS and Azure to make similar investments. "This is Google clearly supporting its developer community so they're ready to use this technology," she adds. "AWS and Azure both have their own developer communities which I'm sure they will be looking to support in a similar way."

Read more: How will web3 and DiFi impact privacy?

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