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Will Google’s Outage Shake Confidence in Its Cloud Service?

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Jun. 10 2019, Updated 1:06 p.m. ET

Network congestion caused the disruptive outage

An outage hit Google’s (GOOGL) digital services early this month, with the effects being felt by businesses that run on Google’s cloud platform as well. Google services YouTube and Gmail were unavailable for several hours across the US and Europe on June 2, the Verge reported. Also affected by the outage were Shopify (SHOP) and Snap (SNAP), which host some of their applications and data on Google’s cloud platform.

Google blamed the outage on network congestion that mostly affected its infrastructure in the eastern region of the US.

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The outage was bad for Google’s image as a cloud vendor

Google has come from behind to make steady gains in the cloud market. In the first quarter, Synergy Research put its share of the global cloud market at ~7.0%, higher than IBM’s (IBM) ~6.0% share and Alibaba’s (BABA) 5.0% share. IBM was once above Google in terms of global cloud market share. Amazon (AMZN) and Microsoft (MSFT) ruled the global cloud market with 35% and 15% market shares, respectively, in the first quarter. The outage like the one Google suffered early this month risks shaking the market’s confidence in the company’s cloud service, which could, in turn, hamper its cloud competitiveness.

More than $214 billion is up for grabs in the global public cloud market this year, according to Gartner estimates.

Facebook also had its moment in the dark

Facebook (FB) also has suffered several service outages this year. The company has explored refunding advertisers affected by the outages that hit its family of social media apps, causing them to lose exposure.

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