Uber, Spurred by Hardware Supply Disruptions, Moves to Multiple Cloud Providers

Uber

Technologies Inc. for the first time is going fully into the cloud, moving its information technology off its own data centers, as it looks to cut costs and refocus engineering efforts.

The San Francisco-based ride-hailing company struck two seven-year cloud deals, one with

Alphabet Inc.’s

Google Cloud and the other with

Oracle

Corp., to move off its data centers completely within a few years, said

Kamran Zargahi,

Uber’s senior director of technology strategy. Over 95% of Uber’s IT is currently housed in those data centers, he said.

The companies declined to comment on the value of the deals. Uber declined to comment on how it plans to spread its data and applications between Google and Oracle’s cloud platforms.

Uber, since its 2009 founding, has primarily relied on its own server hardware rather than the cloud, an anomaly among its peers in the technology sector, said

Matthew Eastwood,

a senior vice president and analyst at International Data Corp.

A tipping point came during the Covid-19 pandemic, when supply-chain disruptions pushed IT hardware delivery timelines to more than 12 months, according to Mr. Zargahi. Using a cloud provider lessens the company’s reliance on the hardware supply chain, he said.

While companies across sectors have recently begun pulling back on IT investments amid economic uncertainty, moving to the cloud can still represent an opportunity to cut back on costs, especially compared with running data centers, said

Sid Nag,

a vice president and analyst at market-research and consulting firm Gartner Inc.

Uber spent $221 million on office and data center rent expenses in 2018, according to paperwork filed for its 2019 initial public offering. Mr. Zargahi said Uber eventually expects the cloud to cost less than its data centers, and won’t renew certain data center leases as it moves to the cloud.

“At the end of the day, everyone’s looking to cut internal costs so they can maximize their profits,” Mr. Nag said. “I think this was an inevitable outcome for a company like Uber. They eventually had to do this.”

And, like some companies that are re-evaluating their workforces to focus on skills like artificial intelligence and away from legacy technologies, Mr. Zargahi said the effort will help Uber shift its engineers from managing data centers to “areas that make differentiation for our product” and to supporting its cloud move.

Google Cloud Chief Executive

Thomas Kurian

said Uber also will tap Google’s mapping service for routing its vehicles, and Google’s advertising product for its nascent ads business as part of the deal.

With Oracle, Uber also is planning to integrate its freight business into Oracle’s cloud-based enterprise resource planning system, as well as other database-related projects, said Oracle Cloud Executive Vice President

Clay Magouyrk.

Uber last week reported $8.6 billion in revenue for the three months through December, a 49% increase from the same period a year earlier. For the current quarter, the company expects bookings of between $31 billion and $32 billion. Wall Street had forecast $31.17 billion.

Write to Belle Lin at [email protected]

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Appeared in the February 14, 2023, print edition as ‘Uber Shifts Its Data to the Cloud.’

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