SAN FRANCISCO - Google on Thursday announced Compute Engine, a cloud-computing service that allows businesses to run their applications on servers in the tech giant's data center.

"We're introducing Google Compute Engine, an infrastructure-as- a-service product that lets you run Linux Virtual Machines (VMs) on the same infrastructure that powers Google," said Google in its official blog.

According to the company, the economy of scale and efficiency of its data centers can provide users 50 percent more computing power than other leading cloud providers.

Industry watchers said Google Compute Engine will compete and challenge the leading position of Amazon Web Services, which was launched in July, 2002.

Google has been building a huge amount of data centers to support its own services and applications over the last decade. In 2008, it started to open up its infrastructure to outside developers and businesses, launching services like Google App Engine to allow users to build applications and websites, and store and analyze data on its servers.

The announcement of Compute Engine came during the second day of the annual Google I/O developers conference. Also on Thursday, Google introduced Chrome web browser for Apple's iOS platform, offline editing for Google Docs and retail selling of Chromebooks at Best Buy.